taw  LID 

I 

B1322m 
1911 


Manual  of 

hip  Subsidies 

An  Historical  Summary  of 
the  Systems  of  All  Nations 

Edwin  M.  Bacon,  A.M. 


UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LIBRARY 


MANUAL   OF   SHIP   SUBSIDIES 


MANUAL  OF 
SHIP   SUBSIDIES 


AN   HISTORICAL  SUMMARY   OF 

THE  SYSTEMS  OF  ALL 

NATIONS 


BY 
EDWIN  M.  BACON,  A.  M. 


CHICAGO 

A.  C.  McCLURG  &  CO. 

LONDON:  c.  F.  CAZENOVB 

1911 


COPYRIGHT 

A.  C.  McCLURG  &  CO. 
1911 

Published  November,  1911 


ENTERED  AT  STATIONERS'  HALL,  LONDON,  ENGLAND 


CONTENTS 

CHAPTER  PAGE 

PREFACE 7 

I      INTRODUCTORY        9 

II      GREAT  BRITAIN 11 

-       Ill      FRANCE 26 

IV      GERMANY 37 

V      HOLLAND-BELGIUM 42 

_j 

VI      AUSTRIA-HUNGARY 44 

VII      ITALY 50 

VIII      SPAIN-PORTUGAL 54 

IX         DENMARK-NORWAY-SWEDEN    ....        57 

X      RUSSIA .59 

XI      JAPAN-CHINA  . 63 

XII      SOUTH  AMERICA 68 

XIII  THE  UNITED  STATES  .      .      .'   .  .      .      .69 

XIV  SUMMARY .      .     97 

INDEX 101 


PREFACE 

THE  intent  of  this  little  book  is  to  furnish  in  compact 
form  the  history  of  the  development  of  the  ship  subsi- 
dies systems  of  the  maritime  nations  of  the  world,  and  an 
outline  of  the  present  laws  or  regulations  of  those  nations.  It 
is  a  manual  of  facts  and  not  of  opinions.  The  author's  aim 
has  been  to  present  impartially  the  facts  as  they  appear, 
without  color  or  prejudice,  with  a  view  to  providing  a 
practical  manual  of  information  and  ready  reference.  He 
has  gathered  the  material  from  documentary  sources  as  far 
as  practicable,  and  from  recognized  authorities,  American 
and  foreign,  on  the  general  history  of  the  rise  and  progress 
of  the  mercantile  marine  of  the  world  as  well  as  on  the 
special  topic  of  ship  subsidies.  These  sources  and  authori- 
ties are  named  in  the  footnotes,  and  volume  and  page  given 
so  that  reference  can  easily  be  made  to  them  for  details 
impossible  to  give  in  the  contracted  space  to  which  this 
manual  is  necessarily  confined. 

E.  M.  B. 
BOSTON,  MASS. 
September  1,  1911. 


Manual  of  Ship  Subsidies 


CHAPTER  I 
INTRODUCTORY 

THE  term  subsidy,  defined  in  the  dictionaries  as  a 
Government  grant  in  aid  of  a  commercial  enterprise, 
is  given  different  shadings  of  meaning  in  different 
countries.  In  all,  however,  except  Great  Britain,  it  is 
broadly  accepted  as  equivalent  to  a  bounty,  or  a  premium, 
open  or  concealed,  directly  or  indirectly  paid  by  Govern- 
ment to  individuals  or  companies  for  the  encouragement  or 
fostering  of  the  trade  or  commerce  of  the  nation  granting  it. 

Ship  subsidies  are  in  various  forms:  premiums  on  con- 
struction of  vessels;  navigation  bounties;  trade  bounties; 
fishing  bounties;  postal  subsidies  for  the  carriage  of  ocean 
mails;  naval  subventions;  Government  loans  on  low  rates  of 
interest. 

In  Great  Britain  they  comprise  postal  subsidies  and  naval 
subventions,  ostensibly  payments  for  oversea  and  colonial 
mail  service  exclusively,  or  compensation  for  such  construc- 
tion of  merchant  ships  under  the  Admiralty  regulations  as 
will  make  them  at  once  available  for  service  as  armed 
cruisers  and  transports.  They  are  assumed  to  be  not  boun- 
ties in  excess  of  the  actual  value  of  the  service  performed, 
with  the  real  though  concealed  object  of  fostering  the  devel- 
opment of  British  overseas  navigation.  Still,  notwithstand- 
ing this  assumption,  such  has  been  their  practical  effect. 

Their  original  objects  when  first  applied  to  steamship 
service,  as  defined  by  a  Parliamentary  committee  in  1853, 
were  — "  to  afford  us  rapid,  frequent,  and  punctual  com- 
munications with  distant  ports  which  feed  the  main  arteries 
of  British  commerce,  and  with  the  most  important  of  our 
foreign  possessions;  to  foster  maritime  enterprise;  and  to 
encourage  the  production  of  a  superior  class  of  vessels, 


10  MANUAL   OF   SHIP    SUBSIDIES 

which  would  promote  the  convenience  and  wealth  of  the 
country  in  time  of  peace,  and  assist  in  defending  its  shores 
against  hostile  aggression."  To  foster  British  commerce 
they  have  undeniably  been  employed  to  meet  and  check  for- 
eign competition  on  the  seas,  as  the  record  shows. 

In  the  United  States  they  have  taken  the  form  of  postal 
subsidies  openly  granted  for  the  two-fold  purpose  of  the 
transportation  of  the  ocean  mails  in  American-built  and 
American-owned  ships,  and  the  encouragement  of  American 
shipbuilding  and  ship-using. 


CHAPTER  II 
GREAT  BRITAIN 

ENGLAND  has  never  granted  general  ship-construction 
or  navigation  bounties  except  in  the  reigns  of  Eliza- 
beth and  James  I.  Under  Elizabeth  Parliament 
offered  a  bounty  of  five  shillings  per  ton  to  every  ship  above 
one  hundred  tons  burden;  and  under  James  I  that  law  was 
revived,  with  the  bounty  applying  only  to  vessels  of  two 
hundred  tons  or  over.* 

A  policy  of  Government  favoritism  to  shipping,  how- 
ever, began  far  back  in  the  dim  ninth  century  with  Alfred 
the  Great.  Under  the  inspiration  of  this  Saxon  of  many 
virtues,  his  people  increased  the  number  of  English  mer- 
chant vessels  and  laid  the  foundation  for  the  creation  and 
maintenance  of  a  royal  navy.f  The  Saxon  Athelstan, 
Alfred's  grandson,  whose  attention  to  commerce  was  also 
marked,  first  made  it  a  way  to  honor,  one  of  his  laws  enact- 
ing that  a  merchant  or  mariner  successfully  accomplishing 
three  voyages  on  the  high  seas  with  a  ship  and  a  cargo  of 
his  own  should  be  advanced  to  the  dignity  of  a  thane 
(baron  ).J 

The  first  navigation  law  was  enacted  in  the  year  1381, 
fifth  of  Richard  II.  This  act,  introduced  "to  awaken 
industry  and  increase  the  wealth  of  the  inhabitants  and 
extend  their  influence,"**  ordained  that  "  none  of  the  King's 
liege  people  should  from  henceforth  ship  any  merchandise 
in  going  out  or  coming  within  the  realm  of  England  but 
only  in  the  ships  of  the  King's  liegeance,  on  penalty  of 
forfeiture  of  vessel  and  cargo."ff 

This  act  of  Richard  II  was  the  forerunner  of  the  code 
of  Cromwell,  which  came  to  be  called  the  "Great  Maritime 


•Royal  Meeker,  "History  of  Ship  Subsidies." 

tJohn  R.  Green,  "Short  History  of  the  English  People." 

JW.    H.   Lindsay,  "History  of   Merchant  Shipping." 

**Lindsay. 

ttDavid    A.    Wells,    "Our    Merchant    Marine,"    p.    96. 


12  MANUAL   OF   SHIP   SUBSIDIES 

Charter  of  England,"  and  the  fundamental  principles  of 
which  held  up  to  the  second  quarter  of  the  nineteenth 
century. 

Under  Charles  I  was  enacted  (1646)  the  first  restrictive 
act  with  relation  to  the  commerce  of  the  colonies,  which 
ordained  "  That  none  in  any  of  the  ports  of  the  plantations 
of  Virginia,  Bermuda,  Barbados,  and  other  places  of 
America,  shall  suffer  any  ship  or  vessel  to  lade  any  goods 
of  the  growth  of  the  plantations  and  carry  them  to  foreign 
ports  except  in  English  bottoms,"  under  forfeiture  of  certain 
exemptions  from  customs.*  It  was  followed  up  four  years 
later  (1650)  under  the  Commonwealth,  by  an  act  prohibit- 
ing "  all  foreign  vessels  whatever  from  lading  with  the 
plantations  of  America  without  having  obtained  a  license."f 

Cromwell's  code,  of  which  the  act  of  1381  was  the  germ, 
was  established  the  next  year,  1651.  Its  primary  object 
was  to  check  the  maritime  supremacy  of  Holland,  then 
attaining  dominance  of  the  sea;  and  to  strike  a  decisive 
blow  at  her  naval  power.  The  ultimate  aim  was  to  secure 
to  England  the  whole  carrying  trade  of  the  world,  Europe 
only  excepted.t  These  were  its  chief  provisions:  that  no 
goods  or  commodities  whatever  of  the  growth,  production, 
or  manufacture  of  Asia,  Africa,  or  America  should  be  im- 
ported either  into  England  or  Ireland,  or  any  of  the 
plantations,  except  in  English-built  ships,  owned  by  English 
subjects,  navigated  by  English  masters,  and  of  which  three- 
fourths  of  the  crew  were  Englishmen;  or  in  such  ships  as 
were  the  real  property  of  the  people  of  the  country  or 
place  in  which  the  goods  were  produced,  or  from  which 
they  could  only  be,  or  most  usually  were,  exported.**  This 
last  clause  was  the  blow  direct  to  Holland,  for  the  Dutch 
had  little  native  products  to  export,  and  their  ships  were 
mainly  employed  in  carrying  the  produce  of  other  countries 
to  all  foreign  markets.  It  was  answered  with  war,  the  fierce 
naval  war  of  1652-1654,  in  which  was  exhibited  that  famous 


*John  Lewis  Ricardo,   "The  Anatomy  of   the  Navigation   Laws,"   p. 
111. 

tLindsay,    vol.    III. 

JLindsay,   "Our  Navigation  Laws" ;   also  his  History. 

••Ricardo ;    also    Lindsay    in    other    words. 


MANUAL   OF    SHIP   SUBSIDIES  13 

spectacle  of  the  at  first  victorious  Dutch  admiral,  Van 
Tromp,  sweeping  the  English  Channel  with  a  broom  at  his 
masthead. 

With  the  final  defeat  of  the  Dutch  after  hard  fighting 
on  both  sides,  their  virtual  submission  to  the  English 
Navigation  Act,  and  their  admission  of  the  English  "  sov- 
ereignty of  the  seas,"*  by  their  consent  to  "  strike  their  flag 
to  the  shipping  of  the  Commonwealth,"  England,  in  her 
turn,  became  the  chief  sea  power  of  the  world.f  During 
the  ten  years  of  peace  that  followed,  however,  the  Dutch 
despite  the  English  Navigation  Act,  succeeded  in  increas- 
ing their  shipping,  and  regained  much  of  the  carrying  trade 
if  not  their  lost  leadership.^ 

Cromwell's  act  was  confirmed  by  Charles  II  in  1660, 
and  made  the  basis  of  the  code  which  then  her  statesmen 
exalted  as  "  The  Great  Maritime  Charter  of  England." 

Early  in  Charles  II's  reign  also  (in  1662)  indirect 
bounties  were  offered  for  the  encouragement  of  the  building 
of  larger  and  more  efficient  ships  for  service  in  time  of  war. 
These  were  grants  of  one-tenth  of  the  customs  dues  on  the 
cargo,  for  two  years,  to  every  vessel  having  two  and  one- 
half  or  three  decks,  and  carrying  thirty  guns.**  Thirty 
years  later  (1694),  in  William  and  Mary's  reign,  the  time 
was  extended  to  three  years.  Under  William  and  Mary 
the  granting  of  bounties  on  naval  stores  was  begun,  and 
this  system  was  continued  till  George  Ill's  time.**  With 
William  and  Mary's  reign  also  began  the  giving  .of  indirect 
bounties  to  fishermen  for  the  catching  and  curing  of  fish. 
After  the  middle  of  the  eighteenth  century  vessels  engaged 
in  the  fisheries  were  regularly  subsidized,  with  the  object 
of  training  sailors  for  the  merchant  marine  and  the  royal 
navy.** 

While  the  fundamental  rules  of  the  "  Maritime  Charter" 
of  1660  remained  practically  unimpaired,  although  in  the 
succeeding  years  hundreds  of  regulating  statutes  were 

'Meaning   the  waters  between   Great  Britain   and   the  continent. 
tGreen,    p.    593. 
JRicardo,   p.    26. 
**Meeker. 


14  MANUAL   OF    SHIP    SUBSIDIES 

passed,  breaks  were  made  in  the  restrictive  barriers  of  the 
code  during  the  first  third  of  the  nineteenth  century  by  the 
adoption  of  the  principle  of  maritime  reciprocity.*  In  1815 
(July  3)  a  convention  establishing  a  "  reciprocal  liberty  of 
commerce,"  between  the  "  territories  of  Great  Britain  in 
Europe  and  those  of  the  United  States,"  was  signed  in 
London.-j-  In  1824-1826  reciprocity  treaties  were  entered 
into  with  various  continental  powers.  In  1827  (August  6) 
the  treaty  of  1815  with  the  United  States  was  renewed. 
In  1830  a  treaty  for  regulating  the  commercial  intercourse 
between  the  British  colonial  possessions  and  the  United 
States  was  executed.^  Under  these  conventions,  repeatedly 
interrupted  by  British  Orders  in  Council  and  by  Presidents' 
proclamations,**  the  trading  intercourse  between  both  coun- 
tries was  regulated  till  the  abrogation  of  the  code  of  1660. 

In  1844  an  indirect  move  against  the  code  was  made, 
with  the  appointment  of  a  committee  of  the  House  of 
Commons  to  inquire  into  the  working  of  the  reciprocal 
treaties  and  the  condition  of  the  mercantile  marine  of  the 
country.ft 

At  this  period  the  competition  of  the  United  States 
in  the  overseas  carrying  trade  of  the  world  was  hard  press- 
ing England.  The  Americans  were  building  the  best  wooden 
ships,  superior  in  model  and  seaworthiness,  the  fastest  sailers. 
They  were  leading  in  shipbuilding.  Much  of  the  British 
shipping  trade  was  carried  on  in  American-built  vessels. 
The  splendid  American  clipper  ships  were  almost  monopoliz- 
ing the  carrying  trade  between  Great  Britain  and  the 
United  States.  Most  of  the  shipping  of  the  world  was  yet 
in  wooden  bottoms.  Iron  ships  were  in  service,  but  iron- 
shipbuilding  was  in  its  infancy. 

The  Parliamentary  inquiry  of  1844  was  followed  up  in 
1847  with  a  move  openly  against  the  ancient  code.  Its 
principles  as  they  then  stood,  essentially  as  in  1660,  despite 
the  multitude  of  regulating  statutes,  are  thus  enumerated: 

*W.   W.   Bates,    "American   Marine,"   pp.    57-59. 

tJohn    Macgregor,    "Commercial    Tariffs." 

JLindsay,   vol.    Ill,    p.    65. 

"Macgregor. 

ttLindsay,  vol.  Ill,  p.  69;  also  pp.  53-54  and  107. 


MANUAL   OF   SHIP   SUBSIDIES  IS 

1.  Certain  named   articles  of  European  produce   could   only   be  im- 
ported   into    the    United    Kingdom    for    consumption    in    British    ships, 
or  in  ships  of   the  country  of   which  the  goods  were  the  produce,   or 
of  the  country   from  which  they  were  usually   imported. 

2.  No  produce  of  Asia,   Africa,   or  America  could  be  imported   for 
consumption    into    the    United    Kingdom    from    Europe    in    any    ships ; 
and    such   produce   could    only    be    imported    from   any    other   place   in 
British    ships,    or   in    ships   of    the   country    of    which    the   goods   were 
the  produce   and   from   which   they  were  usually   imported. 

3.  No    goods    could    be    carried    coastwise    from    one    part    of    the 
United  Kingdom  to  another  in  any  but  British  ships. 

4.  No   goods   could   be   exported   from  the   United   Kingdom   to  any 
of    the    British    possessions    in    Asia,    Africa,    or    America    (with    some 
exceptions  with   regard   to   India)    in   any  but   British  ships. 

5.  No    goods    could    be    carried    from    any    one    British    possession 
in   Asia,   Africa,   or   America,   to   another,   nor   from   one  part   of   such 
possession  to  another  part  of  the  same,  in  any  but  British  ships. 

6.  No    goods    could    be    imported    into    any    British    possession    in 
Asia,  Africa,  or  America  in  any  but  British  ships,  or  in  ships  of  the 
country   of   which   the   goods   were   the   produce;    provided,   also,   that 
such    ships   brought    the    goods    from    that    country. 

7.  No   foreign   ships  were   allowed  to  trade  with   any  of  the  Brit- 
ish   possessions   unless    they    had   been   especially   authorized    to    do   so 
by   an    Order   in   Council. 

8.  Powers  were   given   to  the  Queen  in  Council  which  enabled  her 
to    impose    differential    duties    on    the    ships    of    any    foreign    country 
which    did    the    same    with    reference    to    British    ships ;    and    also    to 
place    restrictions    on    importations    from    any    foreign    countries    which 
placed    restrictions   on   British    importations   with   such   countries. 

Finally,  in  1849,  with  the  adoption  of  the  commercial 
policy  founded  on  freedom  of  trade,  came  the  repeal  of  the 
restrictive  code,  excepting  only  the  rule  as  to  the  British 
coasting  trade;  and  in  1854  the  restrictions  on  that  trade 
were  removed,  throwing  it  also  open  to  the  participation  of 
all  nations. 

Meanwhile  the  British  ocean-mail  subsidy  system  for 
steamship  service,  instituted  with  the  satisfactory  applica- 
tion of  steam  to  ocean  navigation,  in  the  late  eighteen- 
thirties,  had  become  established:  the  first  contract  for  open 
ocean  service,  made  in  1837,  being  for  the  carriage  of  the 
Peninsular  mails  to  Spain  and  Portugal.  Although  suc- 
cessful ventures  in  transatlantic  steam  navigation  had  begun 
nearly  a  score  of  years  earlier,  the  practicability  of  the  em- 
ployment of  steam  in  this  service  was  not  fully  tested  to 
the  satisfaction  of  the  British  Admiralty  till  1838. 


16  MANUAL  OF   SHIP   SUBSIDIES 

In  this,  as  in  so  many  other  innovations,  Americans  led 
the  way.  The  first  steamer  to  cross  the  Atlantic  was  an 
American-built  and  American-manned  craft.  This  pioneer 
was  the  Savannah,  built  in  New  York  and  bought  for 
service  between  Savannah  and  Liverpool.  She  was  a  full- 
rigged  sailing-vessel,  of  300  tons,  with  auxiliary  steam 
power  furnished  by  an  engine  built  in  New  Jersey.  Her 
paddles  were  removable,  so  fashioned  that  they  could  be 
folded  fan-like  when  the  ship  was  under  sail  only.*  She 
made  the  initial  voyage,  from  Savannah  to  Liverpool,  in 
the  Summer  of  1819,  and  accomplished  it  in  twenty-seven 
days,t  eighty  hours  of  the  time  under  steam.  Afterwards 
she  made  a  trip  to  St.  Petersburg,  partly  steaming  and 
partly  sailing,  with  calls  at  ports  along  the  way.  Her 
gallant  performance  attracted  wide  attention,  but  upon  her 
return  to  America  she  finally  brought  up  at  New  York, 
where  her  machinery  was  removed  and  sold. 

An  English-built  full-fledged  steamer  made  the  next 
venture,  but  not  until  a  decade  after  the  Savannah's  feat. 
This  was  the  Curaqoa,  350  tons,  and  one  hundred  horsepower, 
built  for  Hollanders,  and  sent  out  from  England  in  1829. 
The  third  was  by  a  Canada-built  ship  —  the  Royal  William, 
500  or  more  tons,  and  eighty  horsepower,  with  English- 
built  engines,  launched  at  Three  Rivers.  She  crossed  from 
Quebec  to  Gravesend  in  1833.  The  next  were  the  convincing 
tests  that  settled  for  the  Admiralty  the  question  of  trans- 
atlantic mail  service  by  steamship  instead  of  sailing 
packet.  These  were  the  voyages  out  and  back  of  the  Sirius 
and  the  Great  Western  in  1838. 

The  Sirius  had  been  in  service  between  London  and 
Cork.  The  Great  Western  was  new,  and  was  the  first 
steamship  to  be  specially  constructed  for  the  trade  between 
England  and  the  United  States.  Both  were  much  larger 
than  their  three  predecessors  in  steam  transatlantic  ventures, 
and  better  equipped.  The  Sirius  started  out  with  ninety- 
four  passengers,  on  the  fourth  of  April,  1838,  and  reached 
New  York  on  the  twenty-first,  a  passage  of  seventeen  days. 

•Rear-Admiral   George    H.    Preble,    "Chronological   History   of    Steam 
Navigation." 

tPreble.     Lindsay  says  thirty-seven. 


MANUAL  OF   SHIP   SUBSIDIES  17 

The  Great  Western,  also  with  a  full  complement  of  passen- 
gers, left  three  days  after  the  Sirius,  sailing  from  Bristol, 
and  swung  into  New  York  harbor  on  the  twenty-third, 
making  her  passage  in  two  days'  less  time  than  her  rival. 
Both  were  hailed  in  New  York  with  "  immense  acclamation." 
They  sailed  on  their  homeward  voyage  in  May,  six  days 
apart,  and  made  the  return  passage  respectively  in  sixteen 
and  fourteen  days. .  The  Great  Western  on  her  second  home- 
ward voyage  beat  all  records,  making  the  run  in  %  twelve 
days  and  fourteen  hours,  and  "  bringing  with  her  the  advices 
of  the  fastest  American  sailing-ships  which  had  started  from 
New  York  long  before  her."*  This  clinched  the  matter. 
The  Admiralty  now  invited  tenders  for  the  transatlantic 
mail  service,  by  steam,  between  Liverpool,  Halifax,  and 
New  York. 

The  first  call  for  tenders  was  made  in  October,  1838. 
The  St.  George's  Packet  Company,  owners  of  the  Sirius, 
and  the  Great  Western  Steamship  Company,  owners  of  the 
Great  Western,  put  in  bids,  the  former  offering  a  monthly 
service  between  Cork,  Halifax,  and  New  York  for  a  yearly 
subsidy  of  sixty-five  thousand  pounds;  the  latter,  a  monthly 
service  between  Bristol,  Halifax,  and  New  York  for  forty- 
five  thousand  pounds  a  year. 

Neither  offer  was  accepted  for  the  reason,  as  was  stated, 
that  a  semimonthly  service  was  desired.f  Instead,  private 
arrangements  were  made  with  Samuel  Cunard  and  associates 
for  a  carriage  between  Liverpool,  Halifax,  Quebec,  and 
Boston,  twice  a  month,  for  a  term  of  seven  years,  the 
subsidy  to  be  sixty  thousand  pounds  annually,  less  four 
thousand  pounds  for  making  only  one  voyage  a  month  in 
the  winter  season.^  The  contract  required  Mr.  Cunard  and 
his  associates  to  furnish  five  ocean  steamships  and  two  river 
steamers,  the  latter  on  the  St.  Lawrence.f  There  were  also 
definite  restrictions  as  to  turning  their  steamers  over  to 
the  Government  for  use  in  time  of  war.  All  were  to  be 
inspected  by  Admiralty  officers,  and  were  to  carry  officers 

*Preble,  p.   137;   also  Bates,  p.   185. 
tMeeker. 

^Parliamentary  papers   1839,  vol.   XLVI,  no.   666,  as  to  the  private 
contract. 


18  MANUAL   OF   SHIP    SUBSIDIES 

of  the  navy  to  care  for  the  mails.*  The  service  was  started 
with  the  Britannia,  the  first  of  the  four  to  be  finished,  sail- 
ing from  Liverpool  for  Boston  on  July  4,  1840.  Thus  was 
begun  the  career  of  the  celebrated  Cunard  Line.  In  1841 
the  subsidy  was  increased  to  eighty  thousand  pounds,  and 
the  number  of  steamers  to  five;  and  in  1846,  a  further 
increase  brought  the  subsidy  to  eighty-five  thousand 
pounds.f 

The  Admiralty's  favoritism  toward  the  Cunard  associates 
aroused  a  protest  from  the  unsuccessful  bidders  for  the 
subsidy,  and  at  length  the  Great  Western  Company,  whose 
bid  had  been  the  lowest,  caused  a  Parliamentary  inquiry  to 
be  made  into  the  transaction.  They  complained  that  a 
monopoly  had  been  granted  "  to  their  in j  ury  and  to  that 
of  other  owners  of  steamships  engaged  in  the  trade,  and 
who  were  desirous  of  entering  it";  and  they  asked  the 
inquiry  on  the  broad  grounds  "  that  the  public  were  taxed 
for  a  service  from  which  one  company  alone  derived  the 
advantage,  and  which  could  be  equally  well  done  and  at 
less  expense  if  mails  were  sent  out  by  all  steamers  engaged 
in  the  trade,  each  receiving  a  certain  amount  percentage 
on  the  letters  they  carried.":}:  Although  the  fact  was 
brought  out  in  the  testimony  that  the  Great  Western  Com- 
pany had  offered  to  perform  the  service  on  practically  the 
same  basis  as  the  Cunard  associates,  and  that  afterwards 
the  Great  Western  had  proposed  to  do  it  at  half  the  subsidy 
to  the  Cunarders,  the  investigating  committee  sustained  the 
Admiralty's  action.** 

The  Great  Western  Company  overcame  the  advantage 
of  the  Cunarders  in  the  latter's  high  mail  subsidy  by  in- 
creased enterprise  and  superior  management;  and  pros- 
pered. In  1843  they  launched  the  Great  Britain,  the  largest 
and  finest  steamship  up  to  that  period  built  for  overseas 
service.ff  She  was,  moreover,  distinguished  as  the  first 
liner  to  be  built  of  iron  instead  of  wood,  and  to  be  propelled 
by  the  screw  instead  of  the  paddle-wheel.  In  the  latter 

•Lindsay,    vol.    IV. 

tMeeker ;    also    Parl.    papers    1849,    vol.    XII,    no.    571. 

JLindsay,  vol.   X ;   also  Parl.  papers,  report  H.  of  C.,  Aug.,   1840. 

••Report  of  Select  Com.  (1846)  Parl.  papers,  vol.  XV,  no.  565,  p.  3. 

ttLindsay,   vol.   IV. 


MANUAL   OF   SHIP   SUBSIDIES  19 

innovation,  however,  she  was  not  the  pioneer.  Again  the 
Americans  were  first  in  the  application  of  the  auxiliary 
screw  to  ocean  navigation,*  as  they  had  been  first  in 
despatching  a  steamer  across  the  Atlantic. 

The  initial  transatlantic  subsidy  to  the  Cunard  Company 
was  followed  up  in  1840  and  1841  with  contracts  for  steam 
mail-carriage  to  the  West  Indies  and  South  American 
ports.f  The  first  (1840)  went  to  the  Royal  Mail  Steam 
Packet  Company,  for  the  West  Indian  service,  the  mail 
subsidy  fixed  at  two  hundred  and  forty  thousand  pounds 
a  year;J  the  second  (1841),  to  the  Pacific  Steam  Navigation 
Company.  The  latter  enterprise  was  promoted  by  an 
American,**  after  he  had  failed  to  obtain  support  in  his 
own  countryft  for  a  project  to  establish  an  American 
steamship  line  to  ports  along  the  west  coast  of  South 
America,  a  field  in  which  American  sailing  ships  had  long 
been  preeminent.^! 

Up  to  1847  the  British  lines  monopolized  the  trans- 
atlantic service.  Then  the  situation  became  enlivened  by 
the  advent  of  competing  American  steamships  subsidized 
by  the  United  States  Government,  with  high-paying  mail 
contracts.  The  first  of  these  was  the  New  York,  Havre, 
and  Bremen  line  starting  in  1847;  the  next,  the  celebrated 
Collins  Line  between  New  York  and  Liverpool,  underway 
in  1850.  The  competing  vessels  were  American-built, 
wooden  side-wheelers;  those  of  the  Collins  Line  superior  in 
equipment  and  in  passenger  accommodations,  and  faster 
sailers,  than  the  British  craft.§  To  meet  this  competition 
the  Cunard  Company  increased  their  fleet  while  the 
Admiralty  increased  the  subsidy.  Four  new  steamers  were 
first  added,  in  1848,  to  run  directly  between  Liverpool  and 
New  York,  and  the  postal  subsidy  was  raised  to  one  hundred 

•The  Princeton,  sloop-of-war  fitted  with  the  Ericsson  screw,  launched 
the  same  year. 

tLindsay,   vol.    IV,   p.    198,   note. 

tJohn  R.  Spears,  "The  Story  of  the  American  Merchant  Marine," 
pp.  254-255. 

* 'William  Wheelwright,  of  Newburyport,  Massachusetts,  sometime 
American  consul  at  Guayaquil. 

ttWinthrop  L.  Marvin,  "The  American  Merchant  Marine,"  p.  231 ; 
also  Preble ;  and  Lindsay,  vol.  IV,  pp.  316-330. 

JJMarvin,  p.   231. 

§See  p.    76,  post. 


20  MANUAL   OF    SHIP   SUBSIDIES 

and  forty-five  thousand  pounds  a  year  for  forty-four 
voyages  —  three  thousand  nine  hundred  and  twenty-five 
pounds  a  voyage.*  The  competition  began  sharply  with  the 
regular  running  of  the  Collins  liners,  in  1850.  Meanwhile 
during  this  year  and  the  next  additional  contracts  were 
given  the  Cunard  Company  for  carrying  the  mails  between 
Halifax,  New  York,  and  Bermuda,  on  the  North  American 
side,  in  small  steamers,  fitted  with  space  for  mounting  an 
18-pounder  pivot-gun,  subsidy  ten  thousand  six  hundred 
pounds  a  year;  and  for  a  monthly  mail  conveyance  between 
Bermuda  and  St.  Thomas,  subsidy  four  thousand  one 
hundred  pounds  a  year.f  These  services  united  the  West 
Indies  with  the  United  States  and  Canada.f 

In  1851  John  Inman  entered  the  trade  with  his  "  Inman 
Line  "  of  transatlantic  screw  steamers,  which  were  to  carry 
general  cargo  and  emigrant  passengers,  then  a  steadily 
increasing  business,  and  to  be  independent  in  all  respects  of 
either  the  Admiralty  or  the  Post-Office.**  The  unsubsidized 
line  prospered.  The  next  year  (1852)  the  Cunard  Company 
increased  their  liners'  horsepower,  and  the  Admiralty  again 
increased  their  subsidy.  The  contract,  now  made  to  run  for 
ten  years,  provided  a  subsidy  of  one  hundred  and  seventy- 
three  thousand  three  hundred  and  forty  pounds  per  fifty-two 
round  trips  a  year.  The  Americans  were  pressing  them 
closer.  Now  freight  rates  were  cut,  and  the  British  premier 
is  quoted  as  advising  the  Cunard  Company  to  run  with- 
out freight  if  necessary  to  "beat  off  the  American  line."t 
The  increasing  subsidies  occasioned  a  Parliamentary  in- 
vestigation. The  committee,  evidently  impressed  by  the 
gravity  of  the  American  competition,  reported  that  "the 
cost  of  the  North  American  service  was  not  excessive," 
but  they  advised  that  all  contracts  thereafter  "  be  let  at 
public  bidding."ff  This  recommendation  was  not  heeded. 
In  1857,  upon  the  plea  that  the  Americans  were  about 
to  build  larger  and  more  powerful  liners,  the  Cunard 
Company  asked  a  five  years'  extension  of  the  contract  of 

*Meeker. 

tLindsay,  vol.   IV,  p.   198,  note. 

JWells,   p.    148. 

••Bates,   p.   87 ;    also   p.    130. 

ttMeeker. 


MANUAL  OF   SHIP   SUBSIDIES  21 

1852.  The  extension  was  promptly  granted.  At  the  same 
time  they  were  awarded  an  additional  subsidy  of  three 
thousand  pounds  for  a  monthly  mail  service  between  New 
York  and  Nassau  in  the  Bahamas.*  The  next  year  (1858) 
after  suifering  crushing  disasters  in  the  loss  of  two  of  their 
steamers,  and  the  withdrawal  of  their  subsidy,  the  Collins 
Company  failed,  and  their  line  was  abandoned,  f  So  this 
competition  ended. 

Meanwhile  complaints  of  the  Admiralty's  partiality  in 
the  allotment  of  the  contracts  had  been  renewed  more 
vigorously,  with  wider  criticism  of  grants  for  mail  carriage 
largely  in  excess  of  the  postage  received;  and  in  1859-60 
another  Parliamentary  investigation  was  made.  The  ulti- 
mate result  of  this  inquiry  was  a  radical  change  in  the 
system.  The  management  of  the  ocean  mail-service  was 
taken  from  the  Admiralty  and  placed  wholly  in  the  hands 
of  the  Post-Office  Department;  and  at  the  expiration  of  the 
Cunard  Company's  extended  contract,  the  service  was 
thrown  open  to  public  competition,  as  the  Parliamentary 
committee  of  1846  had  advised. 

Bids  were  now  received  from  the  Cunard,  the  Inman, 
the  North  German  Lloyd,  and  other  lines.  The  Inman 
Company  had  previously  offered  to  perform  the  service, 
and  had  done  so  for  sea-postage  only.J  Contracts  were 
finally  concluded  with  the  three  named.  The  contract  with 
the  Inman  Line  was  for  a  fortnightly  Halifax  service,  for 
seven  hundred  and  fifty  pounds  the  round  trip,  nineteen 
thousand  five  hundred  pounds  a  year,  and  a  weekly  New 
York  service  for  sea-postage.  That  with  the  Cunard  Line 
was  for  a  weekly  service  to  New  York  at  a  fixed  subsidy 
of  eighty  thousand  pounds.  That  with  the  North  German 
Lloyd  was  for  a  weekly  service,  at  the  sea-postage.  These 
contracts  were  to  run  for  a  year  only.  The  Cunard's 
subsidy,  although  considerably  less  than  half  the  amount 
that  the  company  had  received  the  previous  ten  years, 
showed  a  loss  to  the  Government,  at  sea-postage  rates,  of 
forty-four  thousand  one  hundred  and  ninety-six  pounds, 

•Meeker 

tSee  p.   77,   post. 

JMeeker. 


22  MANUAL   OF   SHIP   SUBSIDIES 

since  the  amount  actually  earned  at  sea-postage  rates  was 
twenty-eight  thousand  six  hundred  and  eighty-six  pounds.* 

When  advertisements  for  tenders  were  next  issued,  it 
was  found  that  the  Cunard  and  Inman  companies  had 
formed  a  "  community  of  interests,"  with  an  agreement  not 
to  underbid  each  other.  They  asked  a  ten  years'  contract 
on  the  basis  of  fifty  thousand  pounds  fixed  subsidy  for  a 
weekly  service.  Instead,  they  were  awarded  seven  years' 
contracts:  the  Cunard  for  a  semi-weekly  service,  seventy 
thousand  pounds  subsidy;  the  Inman,  for  a  weekly  service, 
thirty-five  thousand  pounds  subsidy.*  At  the  same  time 
contracts  were  made  with  the  North  German  Lloyd  and 
the  Hamburg-American  lines  for  a  weekly  service  for  the 
sea-postage. 

The  Cunard  and  Inman  grants  were  sharply  criticised, 
and  a  Parliamentary  committee  was  appointed  to  investigate 
them.  The  committee's  report  sustained  the  critics.  It 
observed  that  "  the  payments  to  be  made  when  compared 
with  those  made  by  the  American  Post  Office  for  the  home- 
ward mails  are  widely  different,  inasmuch  as  the  American 
Post  Office  has  hitherto  paid  only  for  actual  services  ren- 
dered at  about  half  the  rate  of  the  British  Post  Office  when 
paying  by  the  quantity  of  letters  carried."  The  committee 
recommended  that  these  contracts  be  disapproved,  and  that 
the  system  of  fixed  subsidies  be  abolished.  "  Under  all 
circumstances,"  they  concluded,  "we  are  of  the  opinion 
that,  considering  the  already  large  and  continually  increas- 
ing means  of  communication  with  the  United  States,  there 
is  no  longer  any  necessity  for  fixed  subsidies  for  a  term 
of  years  in  the  case  of  this  service."!  This  recommendation, 
however,  was  not  accepted,  and  the  contracts  were  duly 
ratified. 

The  report  of  this  Parliamentary  committee  is  significant 
in  the  evidence  it  indirectly  affords,  confirming  the  declara- 
tion of  1853,t — that  the  postal  subsidies  were  not  as 
assumed,  payments  solely  for  services  rendered,  but  in  fact 
were  concealed  bounties. 


•Meeker. 

tParl.    papers,    1867-68,    1868-69. 

jSee  p.  20,  ante. 


MANUAL   OF   SHIP   SUBSIDIES  23 

In  1871-72,  when  a  renewed  effort  was  made  to  establish 
an  American  line  of  American-built  ships,*  the  British 
subsidies  were  again  increased.  Then,  also,  was  instituted 
by  the  Admiralty  the  naval  subvention  system  —  the  pay- 
ment of  annual  retainers  to  certain  classes  of  merchant 
steamers,  the  largest  and  swiftest,  in  readiness  for  quick 
conversion  into  auxiliary  naval  ships  in  case  of  war,  and  to 
preclude  their  becoming  available  for  the  service  of  any 
power  inimical  to  British  interests. 

At  the  expiration  of  the  Cunard  and  Inman  seven  years' 
contracts  the  postmaster-general  applied  the  principle  of 
payment  according  to  weight  throughout  for  the  carriage 
of  the  North  American  mails.  But  preference  was  given, 
to  British  ships,  these  receiving  higher  rates  per  pound 
than  the  foreign.  In  1887  an  arrangement  was  entered 
into  by  which  the  Cunard  and  Oceanic  lines  were  to  carry 
all  mails  except  specially  directed  letters,  and  the  pay  was 
reduced,  f  This  method  of  payment  continued  till  1903. 

Then  another  sharp  change  was  made  in  the  subsidy 
system  to  meet  another  and  most  threatening  American 
move.  In  1902  was  formed  by  certain  American  steamship 
men,  through  the  assistance  of  J.  Pierpont  Morgan,  the 
"  International  Mercantile  Marine  Company,"  in  popular 
parlance,  the  "  Morgan  Steamship  Merger,"  a  "  combine " 
of  a  large  proportion  of  the  transatlantic  steam  lines.! 
Upon  this,  in  response  to  a  popular  clamor,  subsidy,  and 
in  a  large  dose,  was  openly  granted  to  sustain  British 
supremacy  in  overseas  steam-shipping.  To  keep  the  Cunard 
Line  out  of  the  American  merger,  and  hold  it  absolutely 
under  British  control  and  British  capitalization,  and, 
furthermore,  to  aid  the  company  immediately  to  build  ships 
capable  of  equalling  if  not  surpassing  the  highest  type  of 
ocean  liners  that  had  to  that  time  been  produced  (the  highest 
type  then  being  German-built  steamers  operating  under  the 
German  flag),  the  Cunard  Company  were  resubsidized 
with  a  special  fixed  subsidy  of  three-quarters  of  a  million 

•The  American  Steamship  Co.  of  Phila.,  with  4  iron  steamers  built 
on  the  Delaware — the  Pennsylvania,  Ohio,  Indiana,  and  Illinois. 

tMee_ker. 

^Ultimately  embracing  the  American,  Red  Star,  White  Star,  At- 
lantic Transport,  and  Dominion  Lines. 


24  MANUAL  OF  SHIP  SUBSIDIES 

dollars  a  year,  instead  of  the  Admiralty  subvention  of  about 
seventy-five  thousand  dollars,  and  in  addition  to  their 
regular  mail  pay,  the  subsidy  to  run  for  a  period  of  twenty 
years  after  the  completion  of  the  second  of  two  high-grade, 
high-speed  ocean  "  greyhounds "  called  for  for  the  Atlantic 
trade.  The  Government  were  to  lend  the  money  for  the 
construction  of  the  two  new  ships  at  the  rate  of  2%  per 
cent  per  annum,  the  company  to  repay  the  loan  by  annual 
payments  extending  over  twenty  years.  The  company  on 
their  part  pledged  themselves,  until  the  expiry  of  the  agree- 
ment, to  remain  a  purely  British  undertaking,  the  manage- 
ment, the  stock  of  the  corporation,  and  their  ships,  to  be 
in  the  hands  of  or  held  by  British  subjects  only.  They  were 
to  hold  the  whole  of  their  fleet,  including  the  two  new 
vessels,  and  all  others  to  be  built,  at  the  disposal  of  the 
Government,  the  latter  being  at  liberty  to  charter  or  pur- 
chase any  or  all  at  agreed  rates.  They  were  not  to  raise 
freights  unduly  nor  to  give  any  preferential  rates  to 
foreigners.*  The  subsidy  is  equivalent  to  about  twenty 
thousand  dollars  for  an  outward  voyage  of  three  thousand 
miles. 

Of  the  British  colonies,.  Canada  grants  mail  and  steam- 
ship subsidies,  and  fisheries  bounties.  In  1909-10  the 
Dominion's  expenditures  in  mail  and  steamship  subsidies 
amounted  to  a  total  equivalent  to  $1,736,372.  The  amount 
appropriated  for  1910-11  increased  to  $2,054,200;  while  the 
estimates  for  1911-12  reached  a  total  of  $2,006,206.  In 
these  estimates  the  larger  items  were:  for  service  between 
Canada  and  Great  Britain;  Australia  by  the  Pacific; 
Canadian  Atlantic  ports  and  Australia  and  New  Zealand; 
South  Africa;  Mexico  by  the  Atlantic,  and  by  the  Pacific; 
West  Indies  and  South  America;  China  and  Japan;  Canada 

*For  details  of  this  contract  see  report  of  (U.  S.)  commissioner  of 
navigation  for  1903,  pp.  48-52,  and  224-268.  The  two  steamships 
called  for  were  the  Lusitania,  31,550  gross  tons,  launched  June  7, 
1906;  and  the  Mauretania,  31,937  gross  tons,  launched  Sept.  19,  1906, 
both  quadruple  screw  turbines,  about  70,000  horsepower ;  the  largest, 
fastest,  and  completes!  steamers  afloat  till  the  production  in  1911  of 
the  Olympic,  45,324  gross  tons,  of  the  International  Mercantile  Ma- 
rine Co.  "s  White  Star  Line. 


MANUAL   OF   SHIP   SUBSIDIES  35 

and  France.*  The  home  Government  pays  the  same  amount 
as  Canada  toward  maintaining  the  China  and  Japan,  and 
British  West  Indies  services.f  The  fisheries  bounties 
amounted  to  one  hundred  and  sixty  thousand  dollars  in 
19094: 

The  grand  total  of  subsidies  and  subventions  paid  by 
Great  Britain  and  all  her  colonies  in  1911  approximate  ten 
million  dollars  annually.  The  subsidies  and  mail  pay  of 
the  Imperial  Government  amounted,  in  round  numbers,  to 
four  million  dollars,  of  which,  in  1910,  the  Cunard  Company 
received  seven  hundred  and  twenty-nine  thousand  dollars.** 
Besides  the  Admiralty  subventions,  retainer  bounties  are 
paid  to  merchant  seamen  and  fishermen  of  the  Royal  Naval 
Reserve. 

Since  the  establishment  of  steam  in  regular  ocean  naviga- 
tion, and  the  substitution  of  iron  for  wooden  ships,  England 
has  maintained  her  leadership  among  the  maritime  nations. 
The  total  tonnage  of  the  United  Kingdom  and  her  colonies, 
steam  and  sailing  ships,  in  1910-11,  stood  at  19,012,294  tons,ft 
nearly  four  fold  that  of  any  other  nation. 

*U.    S.   consul,   Charlottetown,   P.   E.    I.   in  daily  Con.   Repts.    (Jan. 
20)    1911,   no.    16. 

tConsul  General  Small,  Halifax,  in  Con.  Repts.   (Dec.)  1905,  no.  303. 
JThe  American   Year  Book,   1911. 
••American  Year  Book,   1911. 
ttLloyd's  Register,  1910-11. 


CHAPTER  III 
FRANCE 

FRANCE  has  been  rightly  termed  the  bounty-giving 
nation  par  excellence*  She  first  adopted  a  policy  of 
State  protection  of  native  shipping  in  the  middle  of 
the  sixteenth  century  with  the  enactment  (1560)  of  an 
exclusive  Navigation  Act,  forbidding  her  subjects  to  freight 
foreign  vessels  in  any  port  of  the  realm,  and  prohibiting 
foreign  ships  from  carrying  any  kind  of  merchandise  from 
French  ports.f  This  was  followed  up  in  the  next  century 
with  the  institution  of  the  direct  bounty  system  to  foster 
French-built  ships.* 

In  the  reign  of  Louis  XIV,  Colbert,  Louis's  celebrated 
finance  minister,  perfected  (about  1661)  an  elaborate  system 
of  navigation  laws,  evidently  copied  from  the  rigorous 
English  code.  This  was  directed  primarily  against  the 
commerce  of  Holland  and  England,  with  the  ultimate  object 
of  upbuilding  the  home  merchant  marine  and  the  laying  of  a 
broad  basis  for  a  national  navy.J  These  acts  included 
decrees  giving  French  ships  the  monopoly  of  trade  to  and 
from  the  colonies  of  France;  imposing  tonnage  duties  on 
foreign  shipping;  awarding  direct  premiums  on  French-built 
ships.  England  retaliated  immediately.  Holland  remon- 
strated first,  then  made  reprisals.  For  a  time  under  Col- 
bert's energetic  administration  of  the  finances  and  the 
marine,  "prosperity  grew  apace.  At  the  end  of  twelve 
years  everything  was  flourishing."**  Then  came  the  six 
years'  war  (1672-1678)  with  France  and  England  com- 
bined against  Holland,  and  at  its  end  the  French  merchant 
marine  lay  sorely  crippled.** 

Still  the  fundamental  principles  of  the  stringent  naviga- 
tion laws  long  remained.  A  decree  in  1681,  and  subsequent 

•Meeker. 

tLindsay,  vol.   ITT. 

JRear-Admiral  Alfred  T.   Mahan.  "The  Influence  of  Sea  Power  upon 
History,"  pp.   105-107. 
"•Mahan,  p.  73. 

26 


MANUAL   OF   SHIP   SUBSIDIES  27 

ordinances,  defined  what  should  constitute  a  French  vessel; 
and  corporal  punishment  was  ordained  against  a  captain 
for  a  second  offence  in  navigating  a  vessel  of  alien  owner- 
ship under  the  French  flag.*  By  later  decrees,  no  alien  was 
permitted  to  command  a  French  vessel.  An  ordinance  of 
1727  further  restricted  alien  command  by  shutting  out  even 
French  subjects  who  had  married  aliens.*  It  was  required 
that  every  French  vessel  should  be  manned  by  a  crew  two- 
thirds  of  whom  were  French  subjects.*  The  system  of 
regulations  restricting  the  trade  of  the  French  colonies  to 
French  ships,  and  to  the  home  market  held  till  well  into 
the  nineteenth  century. 

During  the  Revolution  a  decree  (May,  1791)  prohibited 
acquisition  of  all  vessels  of  foreign  build.  In  1793  (Sept.) 
it  was  ordained  that  no  foreign  commodities,  productions,  or 
merchandise  should  be  imported  into  France,  or  into  any 
of  her  colonies  or  possessions,  except  directly  in  French 
ships,  or  in  ships  belonging  to  the  inhabitants  of  the  coun- 
tries in  which  the  articles  imported  were  produced,  or  from 
the  ordinary  ports  of  sale  or  exportation.  All  officers  and 
three-fourths  of  the  crew  were  required  to  be  natives  of  the 
country  of  which  the  foreign  vessel  bore  the  flag,  under 
penalty  of  confiscation  of  vessel  and  cargo,  and  a  fine 
enforcible  under  pain  of  imprisonment.  A  tonnage  tax  was 
levied  on  foreign  ships  alone. 

Despite  this  elaborate  code  designed  for  its  benefit  the 
domestic  mercantile  marine  almost  entirely  disappeared 
during  the  wars  of  the  Republic  and  the  Empire;  and  after 
the  Restoration  its  revival  was  so  slow  that  for  some  time 
foreign  ships  were  absolutely  necessary  for  the  supply  of 
the  French  market.*  Still  the  underlying  principles  of  the 
code  were  retained  by  the  Restoration  Government,  modified 
in  a  few  particulars.  The  modifications  included  the  removal 
of  the  prohibition  on  indirect  commerce  —  the  carrying 
trade  between  France  and  other  countries:  —  yet  advantage 
even  in  this  commerce  was  held  for  the  French  flag  through 
"  flag  surtaxes,"  added  to  the  ordinary  customs  duties  levied 
upon  the  merchandise  imported  into  France  in  foreign 

•Lindsay1,  vol.  III. 


28  MANUAL   OF   SHIP   SUBSIDIES 

bottoms,  and  by  the  tonnage  charges.*  A  law  of  March, 
1822,  renewed  the  prohibition  against  the  importation  of 
foreign-built  ships.* 

Early  under  Napoleon  III  movements  toward  the 
adoption  of  an  economic  policy  similar  to  that  then  estab- 
lished in  England  were  begun,  and  shortly  a  succession  of 
radical  changes  in  the  maritime  code  were  instituted.!  In 
I860  a  commercial  treaty  with  England  was  entered  into. 
In  1861  freedom  of  access  of  foreign  shipping  to  the  French 
West  Indies  was  permitted,  subject  to  the  payment  of 
special  duties  varying  according  to  the  ports  whence  the 
goods  were  brought,  or  to  which  they  were  imported.  Then 
at  length,  in  1866,  numerous  restrictions  of  the  old  code 
were  swept  away.f  This  law  of  1866  (May)  admitted 
duty-free  all  materials,  raw  or  manufactured,  including 
boilers  and  parts  of  engines  necessary  for  the  construction, 
rigging,  and  outfitting  of  iron  or  wooden  ships;  abolished  a 
premium,  or  bounty,  granted  by  a  law  of  1841  (May)  on 
all  steam  engines  manufactured  in  France  intended  for 
international  navigation;  admitted  to  registration  foreign- 
built  and  fully  equipped  ships  upon  the  payment  of  two 
francs  a  ton;  abolished  all  tonnage  duties  on  foreign  ships, 
except  such  as  had  been  cr  might  be  levied  for  the  improve- 
ment of  certain  commercial  harbors;  abolished  the  flag 
surtaxes;  opened  colonial  navigation  to  foreign  ships.  The 
monopoly  of  the  coasting  trade  alone  was  retained  for 
French  shipsJf 

Complaints  against  these  new  regulations  were  promptly 
raised  by  shipbuilders  and  ship-outfitters,!  and  in  1870  a 
Parliamentary  inquiry  into  their  grievances  was  made.  It 
appeared  that  shipbuilders,  though  enabled  to  import  free 
such  materials  as  they  needed,  were  handicapped  by 
numerous  and  extensive  formalities;  while  the  outfitters  were 
embarrassed  by  special  burdens  which  the  law  laid  upon 
them,  and  which  their  British  competitors  did  not  have  to 
bear.**  In  1872  laws  were  passed  which  reversed  much  of 

*Prof.   Achille   Viallates,    "How   France   Protects  Her   Merchant  Ma- 
rine," in  North  American   Review,  vol.   184,   1907. 
tLindsay,  vol.   III. 
{Lindsay,  vol.  Ill,  also  Viallatew. 
"Viallate's. 


MANUAL   OF   SHIP   SUBSIDIES  29 

the  act  of  1866.  A  tax  of  from  thirty  to  fifty  francs  a  ton 
measurement  was  re-imposed  on  all  foreign  ships  purchased 
for  registration  in  France,  together  with  a  duty  on  marine 
engines;  again  a  tonnage  duty,  of  from  fifty  centimes  to  one 
franc,  was  imposed  on  ships  of  any  flag  coming  from  a 
foreign  country  or  from  the  French  colonies;  and  the 
provisions  freeing  materials  for  ship  construction,  and 
admitting  foreign-built  ships  to  French  registration  upon 
payment  of  the  two-franc  tax  per  ton,  were  repealed.*  In 
1873  an  extra-parliamentary  commission  took  up  the 
general  question  of  the  state  of  the  commercial  marine,f 
and  the  outcome  of  this  inquiry  was  the  establishment  of 
the  system  of  direct  bounties.  This  system  was  applied  for 
the  first  time  in  the  Merchant  Marine  Act  passed  in 
January,  1881. 

The  act  of  1881  granted  both  construction  and  naviga- 
tion premiums,  and  was  limited  to  ten  years.  The  con- 
struction bounties,  as  was  declared,  were  given  "  as  com- 
pensation for  the  increased  cost  which  the  customs  tariff 
imposed  on  shipbuilders "  in  consequence  of  the  repeal  of 
the  law  granting  free  import  of  materials  by  construc- 
tion ;  the  navigation  bounties,  "  for  the  purpose  of  compen- 
sating the  mercantile  navy  for  the  service  it  renders  the 
country  in  the  recruitment  of  the  military  navy."  The  con- 
struction bounties,  on  gross  tonnage,  were  as  follows:  for 
wooden  ships  of  less  than  200  tons,  ten  francs  a  ton;  of 
more  than  200  tons,  twenty  francs;  for  composite  ships,  that 
is,  ships  with  iron  or  steel  beams  and  wooden  sides,  forty 
francs  a  ton ;  for  iron  or  steel  ships,  sixty  francs ;  for  engines 
placed  on  steamers,  and  for  boilers  and  other  auxiliary 
apparatus,  twelve  francs  per  100  kilograms;  for  renewing 
boilers,  eight  francs  per  100  kilograms  of  new  material  used; 
for  any  modification  of  a  ship  increasing  its  tonnage,  the 
above  rates  on  the  net  increase  of  tonnage.:}:  The  navigation 
bounties  were  confined  to  ships  engaged  in  the  foreign 
trade,  and  were  to  be  reduced  annually  during  the  ten 

•Lindsay,   vol.    Ill,   pp.   457-458. 

tViallat&j. 

^Meeker.     Also  Wells,   pp.   163-164,   note. 


30  MANUAL   OF   SHIP   SUBSIDIES 

years'  term  of  the  law.*  They  were  thus  fixed:  for  French- 
built  ships,  one  franc  and  fifty  centimes  a  registered  ton 
for  every  thousand  sea  miles  sailed  the  first  year,  the  rate 
to  diminish  each  succeeding  year  of  the  term  seven  francs 
and  fifty  centimes  on  wooden  ships,  and  five  centimes  on 
iron  and  steel  ships;  for  foreign-built  ships  owned  by 
Frenchmen  admitted  to  registry,  one-half  the  above  rates; 
for  French-built  steamers  constructed  according  to  plans 
of  the  Navy  Department,  an  increase  of  fifteen  per  cent 
above  the  ordinary  rate.t 

The  first  effect  of  this  law  was  to  stimulate  the  organiza- 
tion of  a  number  of  new  steamship  companies,  and  to 
occasion  activity  in  various  ship-yards,  foreign  (English) 
as  well  as  home,  in  building  steamships  for  their  service.^ 
Most  of  the  domestic-built  iron  and  steam  tonnage  produced 
during  the  law's  ten  years'  term  was  of  -steamers.**  The 
tonnage  of  steamships  increased  from  278,000  tons  in  1880 
to  500,000  tons  in  1890.  Of  this  increase  more  than  three- 
fifths  were  represented  by  vessels  bought  in  other  coun- 
tries.ft  The  results  of  the  navigation  bounties  are  shown 
in  official  statistics  covering  the  years  1882-1890.  During 
this  period  iron  or  steel  French-built  ships  earning  these 
bounties  increased  from  159,714  tons  to  190,821  tons,  gross 
tonnage;  while  wooden  or  composite  tonnage  decreased 
from  150,233  tons  to  57,068  gross.  Foreign-built  iron  or 
steel  tonnage  earning  the  bounties  increased  from  43,787 
tons  to  91,170  tons,  gross;  and  wooden  or  composite  tonnage 
increased  from  1,220  tons  to  9,799  tons,  gross.**  In  1891 
the  law  which  had  then  reached  its  limit  of  ten  years 
was  extended  for  two  years.  Doubting  its  renewal  ship- 
owners had  sometime  before  ceased  to  increase  their  fleets.** 

These  results  were  variously  pronounced  unsatisfactory, 
and  a  revised  or  a  new  law  was  called  for,  with  more  and 
higher  bounties.  Owners  of  wooden  sailing-ships  were 
especially  clamorous  for  larger  benefits.  They  argued  that 
sailing-ships  being  much  slower  than  steamers  should  there- 

*Wells,    pp.    163-164,    note. 
tMeeker.      Also    Wells. 
tWells,   p.    164. 
**Meeker. 
ttViallatfis. 


MANUAL  OF   SHIP   SUBSIDIES  31 

fore  receive  higher  mileage  subsidies  in  order  to  compete 
on  equal  terms  with  steamships.* 

A  new  law  was  enacted  in  1893  (January  30).  This 
act  cut  off  bounties  to  foreign-built  ships,  and  granted 
increased  construction  premiums.  The  construction  sub- 
sidies were  again  declared  to  be  given  as  "  compensation  for 
the  charges  imposed  on  shipbuilders  by  the  customs  tariff  " ; 
the  navigation  bounties,  "  by  way  of  compensation  for  the 
burden  imposed  on  the  merchant  marine  as  an  instrument 
for  recruiting  the  military  marine."  The  construction  sub- 
sidies were  not  to  be  definitely  earned  till  the  ships  were 
registered  as  French;  and  by  ships  built  in  France  for 
foreign  mercantile  fleets,  not  till  they  had  been  delivered. 
The  navigation  bounties  were  accorded  to  French-built  ships, 
of  more  than  80  tons  for  sailing-ships,  and  100  tons  gross  for 
steamers,  engaged  in  making  long  voyages  and  in  inter- 
national coasting;  and  were  limited  to  ten  years.  They 
were  based  on  gross  tonnage  per  thousand  sailed  miles. 
To  merchant  steamships  built  in  accordance  with  plans 
approved  by  the  Navy  Department,  the  rate  of  fifteen  per 
cent  above  the  regular  navigation  bounty  provided  in  the 
law  of '  1881,  was  increased  to  twenty-five  per  cent.  All 
ships  receiving  the  navigation  bounty  were  subject  to 
impressment  in  case  of  war.f 

The  effect  of  this  law  appears  to  have  been  a  division 
of  the  interests  of  shipowners  and  shipbuilders.  The  ship- 
owners found  the  builders  constantly  increasing  their  prices 
until  a  point  was  reached  where  they  were  accused  of 
absorbing  both  premiums  for  construction  and  navigation, 
by  calculating  the  amount  of  bounty  which  proposed  con- 
struction would  demand,  and  adding  that  amount  to  their 
cost  price.:}:  The  increase  of  the  bounty  on  sailing-ships 
was  made  in  the  expectation  that  it  would  check  their 
falling  off,  which  had  been  rapid  since  the  development 
of  steamship  building;  merchant  sailing-ships  were  regarded 
as  the  best  school  for  seamen,  all  of  whom  in  French  com- 

*Meeker. 

fFor  this  law  see  Meeker. 

JU.   S.   Consul  Robert  Skinner,   Marseilles;    Con.   Repts.,   xol.   XVIII 
(1900),   p.   3«. 


32  MANUAL   OF    SHIP    SUBSIDIES 

merce,  up  to  the  age  of  forty-five,  are  subject  at  any  time 
to  draft  into  the  national  navy.  It  did  this  and  more. 
There  resulted  the  "  strange  phenomenon,"  as  Professor 
Viallates  puts  it,  "  of  a  steady  increase  in  the  sailing-fleet, 
while  the  number  of  steam-ships  remained  stationary.* 

Thus,  like  its  predecessor,  unsatisfactory,  the  law  of 
1893  was  succeeded  by  another  act  further  enlarging  the 
bounty  system.  This  law  was  promulgated  in  1902  (April 
7).  It  provided  three  classes  of  bounty:  construction  and 
navigation  as  before,  and  "  commission  compensation "  or 
"  shipping  premiums."  The  construction  bounty  remained 
as  in  previous  law.  The  navigation  bounty,  now  introduced 
as  awarded  "  as  a  general  compensation  for  the  charges 
imposed  on  the  merchant  navy,  and  for  the  excessive  cost 
of  vessels  built  in  France,"  was  increased.f  It  was  payable 
to  all  French-built  sea-going  ships,  steam  and  sailing,  of 
over  100  tons  gross,  and  less  than  fifteen  years  old,  and 
was  limited  to  twelve  years.  To  stimulate  speed  develop- 
ment, only  ships  showing  a  trial  speed  of  at  least  twelve 
knots  with  half  load  were  to  receive  the  full  navigation 
bounty;  to  those  making  less  than  twelve  knots  the  bounty 
was  diminished  by  five  per  cent;  to  those  making  less  than 
eleven,  by  ten  per  cent.  The  shipping  bounty  was  declared 
to  be  granted  "  as  compensation  for  the  charges  imposed 
on  the  mercantile  marine "  by  making  merchant  vessels 
practically  schools  for  seamen.  It  was  a  "  chartered  allow- 
ance "  made  to  foreign-built  iron  or  steel  steamers  manned 
under  the  French  flag  for  long  voyages  or  for  international 
coastwise  trade,  of  more  than  100  gross  tons,  belonging 
to  French  private  persons  or  joint-stock  or  other  com- 
panies, the  latter  having  on  their  boards  a  majority  of 
French  citizens,  and  the  chairman  and  managers  being 
French.  This  allowance  was  reckoned  on  the  gross  tonnage, 
and  per  day  while  the  steamer  was  in  actual  commission 
(three  hundred  days  the  maximum  number  in  any  one 
year).*  The  rate  varied  according  to  the  tonnage.  Up  to 
2000  tons  gross,  it  was  fixed  at  five  centimes  per  ton;  from 
2000  to  3000  tons,  at  four  centimes;  3000  to  4000,  three 

*  Via llatgs. 
tMeeker. 


MANUAL   OF   SHIP   SUBSIDIES  33 

centimes;  above  4000,  two  centimes;  over  7000,  the  same 
grant  as  7000.  The  creation  of  this  "  chartered  allowance," 
as  Professor  Viallates  explains,  was  to  prevent  the  naviga- 
tion bounty  from  becoming  to  the  same  extent  as  under 
the  previous  law  merely  another  form  of  bounty  upon 
shipbuilding.  It  could  so  become,  he  points  out,  only  to 
the  extent  of  which  it  exceeded  the  owner's  bounty.* 

Not  all  of  the  shipping  and  navigation  bounties  were  to 
go  to  shipowners.  Five  per  cent  was  to  be  retained  for 
sailors'  insurance  "  with  a  view  to  reducing  the  deductions 
imposed  on  them  for  the  purpose  of  that  insurance  " ;  and 
six  per  cent  to  be  reserved  for  distribution  for  the  benefit  of 
marines,  as  follows:  "two-thirds  to  the  provident  fund, 
with  a  view  to  diminishing  the  deductions  on  mariners'  pay 
and  to  increasing  the  funds  for  assisting  the  victims  of 
shipwreck  and  other  accidents,  or  their  families;  one-third 
to  the  invalids'  fund,  with  a  view  to  granting  subventions 
to  the  chambers  of  commerce  or  public  institutions  for 
the  creation  and  support  of  sailors'  homes  in  French  ports, 
intended  to  assist  the  nautical  population,  or  of  any  other 
institutions  likely  to  be  of  use  to  them,  especially  schools 
for  seamen."  The  requirement  in  the  old  law  of  1793  as 
to  the  composition  of  the  crews  of  French  merchant  ships 
was  modified,  reducing  the  proportion  of  sailors  who  must 
be  Frenchmen. 

French-built  ships  were  privileged  to  chose  between  the 
shipping  and  the  navigation  bounties.  To  obtain  the  ship- 
ping bounty  for  the  maximum  of  three  hundred  days 
steamers  must  make  during  the  year  a  minimum  of  thirty- 
five  thousand  miles  if  engaged  in  the  overseas  trade,  or 
twenty-five  thousand  if  in  "  cabotage  international."-^  Ship- 
owners agreeing  to  maintain  on  routes  not  served  by  the 
subsidized  main  steamers  a  regular  line,  performing  a  fixed 
minimum  of  journeys  per  year,  with  vessels  of  a  certain  age 
and  tonnage,  were  permitted  to  claim,  in  lieu  of  the  regular 
bounties,  a  fixed  subsidy  during  the  term  of  their  agreement, 
equal  to  the  average  of  the  bounties  to  which  the  vessels 

•North  American  Review,  vol.  CLXXXIV,  1907. 

tEmbracing  voyages  within   the   limits  of  the  ports  of   the  Mediter- 
ranean, North  Africa,   and  Europe  below  the  Arctic  circle — Meeker. 


34  MANUAL   OF   SHIP    SUBSIDIES 

in  commission  would  be  entitled  for  the  whole  of  the 
journeys  performed.  The  new  tonnage  to  be  admitted  to 
the  benefit  of  the  law  was  limited  to  three  hundred  thousand 
gross  tons  of  steamers  and  one  hundred  thousand  gross 
tons  of  sailing-ships;  of  which  new  tonnage  freight-built 
ships  could  form  two-fifths.  The  appropriation  for  the 
payment  of  the  bounties  was  also  limited,  to  guard  against  a 
too  heavy  burden  upon  the  national  treasury.  This  was 
fixed  at  two  hundred  million  francs:  one  hundred  and  fifty 
million  for  the  shipping  and  navigation  bounties  and  fifty 
million  for  the  construction  bounties.* 

Unforeseen  results  of  an  unsatisfactory  nature  followed 
the  application  of  this  law.  Professor  Viallates  effectively 
states  them  in  the  fewest  words: 

"To  be  sure  of  profiting  by  the  advantages  of  the  law  the 
ship-owners  hastened  to  order  vessels  and  to  place  them  on  the 
stocks.  Their  haste  increased  when  it  was  seen  that  there  existed 
a  considerable  discrepancy  between  the  allowed  tonnage  and  the 
money  appropriated.  The  appropriation  of  one  hundred  and  fifty 
million  francs,  opened  to  assure  the  payment  of  the  navigation 
bounties  and  the  compensation  for  outfit,  was  much  too  little.  The 
rush  was  such,  as  soon  as  this  formidable  mistake  was  discovered, 
that,  less  than  nine  months  after  its  promulgation,  from  December 
20,  1902,  the  useful  effect  of  the  law  was  completely  exhausted."! 

Thereupon  resort  was  had  to  another  Extra-Parliamentary 
commission  to  frame  another  system.  The  result  was  a  law 
of  1906  (April),  which  separated  the  shipbuilder  from  the 
shipowner.  The  provisions  for  the  construction  bounty  were 
redrawn  with  the  object,  as  Professor  Viallates  explains,! 
"  not  only  to  equalize  the  customs  duties  affecting  the 
materials  employed,  but  also  to  give  the  builders  a  com- 
pensation sufficient  to  enable  them  to  concede  to  the  French 
shipowners  the  same  prices  as  foreign  builders."  The  rates 
were  thus  fixed  on  gross  measurement:  for  iron  and  steel 
steamships,  one  hundred  and  forty-five  francs  per  ton; 
for  sailing-ships,  ninety-five  francs  per  ton:  these  bounties 
to  decrease  annually  to  four  francs  and  fifty  centimes  for 
steamships  and  three  francs  ninety  centimes  for  sailing- 
ships  during  the  first  ten  years  of  the  law's  application, 

•Meeker  and   Viallates,  summaries  of  this  law. 
tNorth   American   Review,   vol.    CLXXXIV,    1907. 


MANUAL   OF   SHIP   SUBSIDIES  35 

thereafter  to  stand  at  one  hundred  francs  and  sixty-five 
francs,  respectively;  for  engines  and  auxiliary  apparatus, 
twenty-seven  francs  fifty  centimes  per  hundred  kilograms. 
The  navigation  bounty  to  owners  of  French  or  foreign- 
built  ships  under  the  French  flag,  was  calculated  per  day  of 
actual  running:  for  steamships,  four  centimes  per  ton  gross 
up  to  3000  tons;  three  centimes  more  up  to  6000;  two  more 
to  6000  and  above;  for  sailing-ships,  three  centimes  per 
ton  up  to  500  tons,  two  more  up  to  1000,  and  one  more  to 
1000  and  above.  This  bounty  to  continue  for  the  first  twelve 
years  of  the  law.  The  provisions  for  fostering  speed 
development  in  steamships  excluded  from  compensation 
those  making  on  trial,  half  laden,  less  than  nine  knots,  in 
place  of  ten  in  the  previous  law;  reduced  the  rate  to  fifteen 
per  cent  of  the  bounty  for  those  showing  more  than  nine 
and  less  than  ten  knots;  and  increased  this  rate  by  ten  per 
cent  for  those  making  at  least  fourteen  knots,  by  twenty-five 
per  cent  for  fifteen  knots,  and  thirty  per  cent  for  sixteen 
knots.  The  extra  bounty  equal  to  twenty-five  per  cent  of 
the  regular  navigation  bounty  to  steamships  constructed  on 
plans  approved  by  the  Navy  Department,  and  the  provision 
making  all  merchant  ships  subject  to  requisition  by  the 
Government  in  case  of  war,  were  retained  as  in  previous 
laws.*  This  is  the  law  at  present  in  force. 

The  total  cost  of  the  French  bounty  system  in  the  twenty- 
four  years  from  its  establishment  with  the  law  of  1881  to 
1904,  when  the  law  of  1902  had  practically  run  out,  was  in 
round  numbers  upward  of  three  hundred  and  eighty-one 
million  francs.  Professor  Viallates  shows  that  the  new  law 
of  1906  would  absorb  during  the  first  seven  years  of  its 
application,  upward  of  eighty-four  million  francs.f 

These  construction  and  navigation  bounties  are  exclusive 
of  the  subventions  to  steamships  for  carrying  the  mails. 
The  establishment  of  the  French  postal  ocean  steamship 
subsidy  system  dates  back  to  1857,  when  a  contract  was 
made  with  the  Union  Maritime  Company  for  a  service  to 
New  York,  Mexico,  and  the  West  Indies.  The  assertion 
is  made  by  Professor  Meeker  that  the  French  postal  sub- 

*For  this  law  see  Senate  Doc.  no.  488,  59th  Cong.,  1st  sess. 
tNorth    American    Review,    vol.    CLXXXIV,    1907. 


36  MANUAL  OF   SHIP   SUBSIDIES 

ventions  paid  "  ostensibly  for  the  furtherance  of  the  mails," 
are  "  both  greater  in  amount  and  more  influential  upon 
shipbuilding,  navigation,  and  commerce  than  are  the 
general  premiums  upon  shipbuilding  and  navigation."*  Says 
Viallates: 

"The  system  is  calculated  to  secure  regular  and  rapid  postal  com- 
munication with  certain  countries  beyond  seas,  and  at  the  same  time 
to  constitute  an  auxiliary  fleet  capable  of  being  utilized  by  the  navy 
in  times  of  war.  The  existence  of  fixed  lines  with  constant  service 
is  also  a  means  of  favoring  the  expansion  of  the  national  com- 
merce. The  State  obtains,  moreover,  in  exchange  for  the  subsidy, 
direct  advantages ;  the  free  carriage  of  the  mails  and  the  funds  of 
the  public  treasury ;  transport  of  officials  at  a  reduced  price,  and  of 
arms  and  stores  destined  for  the  service  of  the  State." 

Meeker: 

"The  greater  part  of  the  concealed  subventions  undoubtedly  goes 
to  the  shipbuilders,  for  all  mail  contract  steamers  must  be  built  in 
French  yards  and  of  French  materials.  These  first  costs  are  esti- 
mated to  be  from  twenty-five  to  fifty  per  cent  greater  in  France  than 
in  England. "t 

There  is  no  competition  in  the  letting  of  the  French  mail 
contracts.  They  go  to  four  steamship  concerns.  For  many 
years  more  than  one  half  of  the  total  steam  tonnage  of 
France  has  been  owned  by  these  four  subsidized  lines:  the 
Compagnie  Gtndrale  Transatlantique,  the  Compagnie  des 
Messageries  Maritimes,  the  Chargeurs  Rcunis,  and  the 
Compagnie  Fraissant.^ 

The  great  ship-yards  have  developed  a  capacity  for  build- 
ing steamships  of  the  largest  class.  The  tonnage  since  1881, 
when  it  had  fallen  to  914,000  tons,  had  increased  only  to 
1,052,193  tons  in  1900.  By  1910-11,  it  had  reached  1,882,280 
tons.J  The  total  mail  subsidies  average,  in  round  numbers, 
five  million  dollars  a  year,  while  the  construction  and  naviga- 
tion bounties  amount  to  three  and  a  half  million  dollars 
additional. 

Practically  every  French  vessel  floating  the  French  flag 
and  engaged  in  foreign  trade  either  receives  or  has  received 
subsidies,  or  bounties,  from  the  Government.** 


•Meeker. 

tMeeker. 

^Lloyd's  Register,  1910-11. 

••Senate   Kept.,   no.    10,    59th  Cong.,    1st   sess. 


CHAPTER   IV 
GERMANY 

GERMANY  was  a  close  follower  of  France  in  the 
adoption  of  the  direct  ship  bounty  system.  Only 
two  months  after  the  promulgation  of  the  initial 
French  law  of  1881,  Bismarck  brought  the  question  before 
the  Reichstag,  with  an  exhibit  of  this  act.  In  an  elaborate 
memorial  (April  6,  1881)  he  reviewed  the  general  subject 
of  State  bounties  and  subsidies  to  shipping  in  various 
maritime  countries,  and  closed  with  this  pointed  declaration: 
"  It  is  deserving  of  serious  consideration  whether,  under  the 
circumstances  as  given,  German  shipping  and  German  com- 
merce can  hope  for  further  prosperous  developments  as 
against  the  competition  of  other  nations  aided  by  public 
funds  and  assistance.* 

At  this  time  the  German  marine  was  represented  by  a 
substantial  fleet  of  merchant  steamships,  but  all  were 
foreign-built,  mostly  from  British  ship-yards.  The  Govern- 
ment was  paying  only  a  postal  subsidy  of  about  forty-seven 
thousand  dollars  —  a  sum  in  proportion  to  the  weight  of  the 
parcels  forwarded  —  in  the  overseas  trade  to  the  partici- 
pating German  steam  lines.  A  first  step  had  been  taken 
indirectly  in  favor  of  domestic  shipbuilding  six  years  earlier 
(1879),  when  Bismarck,  in  introducing  the  general  protective 
system,  exempted  this  industry,  and  free  entry  was  permitted 
to  German  ship-yards  of  materials  used  in  the  construction 
and  equipment  of  merchant  as  well  as  of  war-ships,  which 
then  were  only  on  the  domestic  stocks.f  Bismarck's  pro- 
posal of  1881,  to  meet  French  subsidies  with  German 
subsidies,  was  avowedly  with  the  single  object  of  promoting 
with  State  aid  a  German  mercantile  marine. 

The  project  was  brought  before  the  Reichstag  early  in 

•For  this  Memorial  see  U.   S.   Con.   Rept.,  no.   112,  Jan.,   1890,   pp. 
108-118. 

tJ.   Ellis  Barker,   "Modern    Germany,"   3rd  edition,    1909. 
87 


38  MANUAL   OF    SHIP    SUBSIDIES 

1884  and  warmly  discussed.  Earnest  protests  were  raised 
against  it  by  shipping  merchants  of  the  chief  German  sea- 
ports;* while  earnest  support  came  from  other  merchants 
and  varied  interests.  The  initial  proposal  was  for  the 
establishment  of  a  subsidized  mail  service  by  German  steam- 
ships. It  contemplated  an  annual  subsidy  of  four  million 
marks,  with  fifteen  years'  contracts,  for  such  service  between 
Germany  and  Australia  and  East  Asia.  The  measure  was 
defeated  in  the  Reichstag  that  year.  Brought  forward  the 
next  year  (1885),  and  in  a  new  form,  it  was  finally  enacted 
in  April  and  went  into  effect  the  following  July. 

This  law  increased  the  annual  subsidy  from  four  million 
marks  as  first  proposed  to  four  million  four  hundred 
thousand  marks,  of  which  one  million  seven  hundred 
thousand  was  offered  for  the  East  Asian  line,  to  China  and 
Japan;  two  million  three  hundred  thousand  for  the 
Australian  line,  and  four  hundred  thousand  for  a  branch 
line  connecting  Trieste  with  the  Australian  line  at  Alex- 
andria. The  contracts  in  accordance  with  it  all  went  to 
the  North  German  Lloyd  Company,  of  Bremen.  The  con- 
vention between  the  Government  and  this  company  required 
that  the  new  vessels  to  be  furnished  must  be  built  in  German 
yards  and  of  German  material.  The  coal  supply  was,  as 
far  as  practicable,  to  be  of  German  product.  The  chan- 
cellor was  empowered  to  take  over  all  the  company's 
steamers  for  the  mobilization  of  the  navy,  at  their  full  value, 
or  on  hire  at  proper  compensation.  The  sale  or  loan  of  a 
steamer  to  a  foreign  power  could  be  made  only  by  per- 
mission of  the  chancellor.  The  number  of  voyages  to  be 
made  on  each  line  yearly,  and  the  rate  of  speed,  were  set 
down  in  careful  detail.  Failure  to  observe  the  table  of 
voyages,  without  sufficient  reason,  subjected  the  company 
to  heavy  penalties.  All  persons  employed  in  connection 
with  the  mail  service  were,  if  practicable,  to  be  German 
subjects.  All  officers  in  the  service  of  the  empire,  relief 
crews,  weapons,  ammunition,  equipments,  or  supplies  for 
the  imperial  navy,  were  to  be  carried  at  twenty  per  cent 
under  the  regular  tariff.f 

•Wells,   p.    166. 

tU.   S.   Con.  Kept.,  no.    61.  1886,   pp.    285-287. 


MANUAL   OF   SHIP   SUBSIDIES  39 

Subsequent  laws  made  additions  to  the  free  list  of  raw 
and  manufactured  shipbuilding  material;  and  preferential 
rates  on  the  State  railroads  were  arranged  for  the  trans- 
portation of  steel,  iron,  timber,  from  the  interior,  where 
these  are  found  at  an  average  distance  of  some  four  hundred 
miles  from  the  coast,  to  the  ship-yards.*  Speedily  large  and 
superior  steamships  were  designed  and  turned  out  from  the 
enlarged  ship-yards,  the  first  ocean  flyer  being  the  Auguste 
Victoria  for  the  Hamburg-American  Line.  In  1890  a 
subsidy  of  ninety  thousand  marks  annually  was  granted 
for  an  East  African  line  on  a  ten-years'  contract.  Within 
less  than  six  years  the  establishment  of  a  fortnightly  Asiatic 
service  was  agitated;  and  in  1896  a  bill  granting  a  yearly 
subsidy  of  one  million  four  hundred  thousand  marks  therefor, 
was  brought  before  the  Reichstag.  If  this  were  forthcoming 
the  North  German  Lloyd  agreed,  besides  furnishing  the 
fortnightly  service,  to  increase  the  speed  of  their  steamers, 
to  send  ships  direct  to  Japan,  and  to  meet  all  requirements 
of  the  Admiralty  with  respect  to  ships  and  crews.f 

Now  the  advocates  of  further  subsidies  maintained  that 
the  policy  instituted  with  the  law  of  1885  had  proved  its 
effectiveness.  The  indirect  advantages  from  the  subventions 
were  claimed  to  be  quite  as  great  as  the  direct.  While 
before  1885  all  large  ships  for  German  companies  had  been 
ordered  in  England,  now  all  large  ships  for  the  German 
transatlantic  lines  were  built  in  Germany,  t  This  condition, 
the  increasing  activity  in  domestic  shipbuilding,  and  the 
steady  growth  of  the  empire's  commercial  marine,  were 
presented  as  conclusive  evidence  of  the  law's  effect.  Ger- 
many was  now  pressing  into  sharp  rivalry  with  England, 
and  turning  out  larger  and  speedier  steamships.^  The  in- 
creased subsidy  for  the  China  service  was  especially  urged 
upon  these  grounds:  the  importance  of  placing  the  German 
mail  service  in  the  East  on  a  par  with  the  services  of 
England  and  France,  the  benefits  to  commerce,  and  the  aid 
of  the  national  defence.** 


•Barker,  3rd  ed. 
tMeeker. 

JU.   S.  Con.  Repts.,  1889,  no.   101,  p.  544. 

**Meeker.     Also  German  report  on  the  operation  of  the  law  of  1885, 
in   report  of   (U.   S.)    commissioner  of  navigation  for  1898. 


40  MANUAL   OF   SHIP   SUBSIDIES 

The  measure  met  opposition  at  the  session  in  which  it 
was  first  introduced;  but  at  the  next  session  (1898),  after 
amendment,  it  became  law.  By  this  act  the  subsidy  was 
fixed  at  one  million  and  a  half  marks  a  year  for  the  ex- 
tension of  the  East  Asiatic  service  to  China  direct,  and  for 
making  the  whole  service  fortnightly;  and  the  contract  was 
extended  for  another  fifteen  years.  It  was  conditioned  that 
if  foreign  competing  lines  should  increase  the  speed  of  their 
ships  the  North  German  Lloyd  must  do  likewise,  and  with- 
out additional  subsidy,  unless  the  foreign  companies  should 
receive  extra  payments.* 

The  total  annual  subventions  for  the  Asiatic  and 
Australian  service  had  now  reached  five  million  five  hundred 
and  ninety  thousand  marks  ($1,330,420).  After  January, 
1899,  under  a  contract  between  the  North  German  Lloyd 
and  the  Hamburg-American  Line  then  made,  a  part  of  this 
subsidy  went  to  the  latter.  In  1901  the  subvention  to  the 
East  African  line  was  increased  to  one  million  three  hundred 
and  fifty  thousand  marks.  Thus  Germany's  grand  total  of 
annual  payments  in  postal  subventions  had  reached  six 
million  nine  hundred  and  forty  thousand  marks. 

Besides  these  postal  subventions  and  the  free  entry  to 
materials  used  in  ship-construction  and  equipment,  and  the 
preferential  railway  rates  on  long  hauls  of  the  heavy 
domestic  materials,  barely  covering  the  cost  of  handling 
and  transportation,!  the  Government  bestows  a  special  form 
of  indirect  bounty  upon  the  subsidized  steamship  lines  in 
the  shape  of  largely  reduced  through  freight  rates.  These 
include  substantial  reductions  on  merchandise  exported  from 
inland  Germany  to  East  Africa  and  the  Levant.  Thus  the 
combined  land  and  sea  through  rates  are  brought  consider- 
ably below  those  in  force  on  goods  sent  to  German  ports  for 
direct  importation^ 

Under  these  and  other  favoring  conditions  the  German 
merchant  marine  has  advanced  in  total  tonnage  from  an 
insignificant  place  in  1880  to  the  third  in  rank  among  the 

•Meeker.      Also    German    report    on    the    operating    of    the    law    of 
1885,    in   report    of    commission   of    navigation    for    1898. 
tBarker,    3rd    ed. 
JMeeker. 


MANUAL   OF   SHIP   SUBSIDIES  41 

maritime  nations  in  1911.  Between  1885  and  1900,  a  period 
of  only  fifteen  years,  its  growth  was  tenfold.*  In  1890  the 
gross  tonnage  stood  at  928,911  tons:  in  1900  it  had  reached 
a  total  of  2,159,919  tons.  Steamers  and  sailing-ships  were 
nearly  equal  in  tonnage.  German-built  steamships  had  won 
the  speed  record  in  ocean  liners.  Thereafter  the  output 
of  steamships  became  much  the  larger,  and  in  1906  the 
Government  was  taking  measures  to  revive  the  sailing-ship 
trade,  because  of  its  value  as  a  training-school  for  seamen 
for  the  navy.f  In  1910-11  the  total  tonnage  was  recorded 
at  4,333,186  tons.J 

The  other  influences  contributing  to  this  extraordinary 
growth  are  variously  stated  according  to  the  observer's 
point  of  view.  The  United  States  consul  at  Hamburg  sees 
them  in  the  "  rapid  transformation  of  the  country  from  a 
non-producing  nation  into  one  of  the  foremost  industrial 
powers  of  Europe,  a  large  available  supply  of  excellent 
and  cheap  labor,  and  the  geographical  situation  of  the 
empire."**  The  historian  of  Modern  Germany  sees  them  in 
German  business  methods: 

"The  astonishing  success  of  the  German  shipbuilding  industry  is  due 
partly  to  its  excellent  management  and  organization ;  partly  to  the 
application  of  science  and  experience  to  industry;  *  *  *  partly 
to  the  harmonious  co-ordination  and  co-operation  of  the  various  eco- 
nomic factors  which  in  more  individualistic  countries,  such  as  Great 
Britain,  are  not  co-ordinated,  and  often  serve  rather  to  obstruct  and 
to  retard  progress  by  unnecessary  friction  than  to  provide  it  by  har- 
monious action."ft 


*Barker,   3rd  ed. 

tU.   S.   Con.  Kept.,  no.   13,  July,   1906,  pp.   87-89. 
{Lloyd's  Register,  1910-11. 

**U.  S.  Consul  General  Robert  P.  Skinner,  Hamburg,  in  Daily  Con. 
Repts.,   April   8,   1911,   no.   82. 

ttBarker,   Modern  Germany,  p.  490. 


CHAPTER   V 
HOLLAND  —  BELGIUM 

THE  home  Government  of  the  Netherlands  gives  neither 
construction  nor  navigation  bounties.  Only  subven- 
tions to  steamship  lines  for  carrying  the  mails  are 
granted.  The  single  purpose  of  these  subventions  is  de- 
clared to  be  to  secure  the  prompt  and  effective  furtherance 
of  the  mails  at  reasonable  cost.*  The  contracts  are  not 
publicly  let,  but  go  to  the  several  steamship  lines  plying  to 
foreign  ports  and  to  the  Dutch  colonies.  The  amounts 
fixed  by  contract  are  at  a  given  rate  per  voyage.  The  cost 
of  the  subventions  to  the  Dutch  East  Indian  lines  is  divided 
equally  between  the  home  and  colonial  Governments.  Inde- 
pendently of  the  home  Government  the  Dutch  East  Indian 
Government  grants  general  mileage  subventions  for  the 
maintenance  of  lines  making  regular  communication  with 
the  various  ports  of  the  East  Indies.*  Holland's  gross 
tonnage  in  1910  had  reached  the  respectable  total  of 
1,015,193  tons,f  ranking  her  eighth  among  the  maritime 
nations. 

Belgium  had  a  subsidy  system  for  shipbuilding  before 
1852.  At  present  neither  bounties  to  domestic  shipping  nor 
postal  subventions  are  paid  by  the  Government.  Subsidies, 
or  premiums,  however,  are  given  to  certain  foreign  steamship 
lines  to  encourage  the  commerce  of  Antwerp.  These  in- 
clude an  annual  payment  of  eighty  thousand  francs 
($15,440),  and  the  refunding  of  lighterage  and  pilotage 
dues,  to  the  North  German  Lloyd  on  their  East  Asiatic  and 
Australian  lines;  and  fifteen  hundred  francs  ($289.50)  to  the 
German-Australian  line  for  each  call  to  and  from  Australia, 
the  maximum  subvention  limited  to  thirty-nine  thousand 
francs  ($7527).  A  Danish  steamship  concern  is  also  ex- 

*  Meeker. 

tLloyd's  Register,    1910-11. 


MANUAL   OF   SHIP   SUBSIDIES  43 

empted  from  lighterage  and  harbor  dues  and  granted  other 
facilities,  but  receives  no  money  premiums.*  Belgium  ton- 
nage in  1910  comprised  only  165  steam  and  sailing  ships  for 
a  total  of  299,638  tons.f 

•Meeker. 

tLloyd's   Register,    1910-11. 


CHAPTER   VI 
AUSTRIA-HUNGARY 

THE  Imperial  Government  of  Austria-Hungary  spurred 
by  the  action  of  Germany,  instituted  a  direct  subsidy 
system,  also  modelled  after  that  of  France,  in  1893, 
when  the  Austrian  merchant  marine  was  languishing.* 

A  postal  subsidy  had  long  been  in  operation,  the  sub- 
sidies being  all  awarded  to  a  single  steamship  company  — 
the  Austrian  Lloyd,  earlier  the  Austro-Hungarian  Lloyd. 
They  were  practically  mileage  and  speed  bounties,!  increas- 
ing with  the  extension  of  service.  Ten-years'  contracts  were 
at  first  made  with  this  company.  The  contracts,  executed 
in  1888,  particularly  guarded  domestic  interests.  In  the 
purchase  of  materials  it  was  required  that  preference  be 
given  to  Austro-Hungarian  industries.  The  coal  used  must 
be  bought  from  Austro-Hungarian  subjects  in  the  propor- 
tion of  two  tons  from  Austria  and  one  ton  from  Hungary, 
provided  that  "  the  price  is  not  greater  than  foreign  coal, 
and  that  the  steam-producing  power  of  the  native  coal  is 
equal  to  at  least  eighty-four  per  cent  of  that  of  foreign 
coal."  In  the  building  and  repairing  of  their  ships,  or  parts 
of  ships,  and  engines,  the  company  must  also  favor  home 
interests.  Ships,  engines,  or  boilers  could  be  ordered  abroad 
only  with  the  consent  of  the  foreign  office  when  shown  that 
the  work  cannot  be  made  in  Austria  within  proper  time, 
or  that  the  want  can  be  supplied  by  a  foreign  country  on 
more  favorable  terms.:}: 

By  a  law  of  July,  1891,  the  rates  for  mail-contract  steam- 
ships were  fixed  as  follows:  for  fast  lines,  making  above 
ten  knots,  a  maximum  rate  of  seventy  kreutzers  per 
nautical  mile;  for  slower  lines,  fifty  kreutzers  a  mile.  The 
total  amount  of  mileage  bounty  payable  each  year  was 
limited  to  two  million  nine  hundred  and  ten  thousand  florins. 


•Meeker. 

tU.   S.   Con.   Kept.,  Jan.,   1890,   no.   112,  p.   95-96. 
JU.  S.  Con.  Repts.,  vol.  XXXII,  1890,  no.   112,  pp.   23-24. 
44 


MANUAL   OF   SHIP   SUBSIDIES  45 

But  in  addition  to  this  bounty  the  Government  agreed  to 
pay  the  Suez  Canal  tolls.  To  encourage  the  Austrian 
Lloyd  to  build  larger  and  swifter  vessels  the  Government 
further  agreed  to  advance  the  company  one  million  and  a 
half  florins.  This  was  to  be  furnished  in  three  equal  pay- 
ments yearly  (1891,  1892,  1893),  and  was  to  be  repaid  in 
five  equal  payments  of  three  hundred  thousand  florins  each, 
beginning  in  January,  1902.  The  company's  ships  were  to 
be  exempted  from  consular  fees,  "  the  same  as  vessels  of 
the  imperial  navy";  and  were  to  be  at  the  disposal  of  the 
naval  and  military  departments  in  case  of  war.  All  the 
officials  of  the  company  were  to  be  Austrian  subjects,  "naval 
officers  either  active  or  retired  to  be  given  the  preference  " ; 
and  there  was  to  be  an  administrative  committee  of  eight 
members,  the  president  appointed  by  the  Emperor  and  two 
other  members  by  the  ministry  of  commerce,  the  intention 
of  this  provision  being  to  give  the  Government  control  over 
the  company's  affairs.* 

The  general  subsidy  law  of  1893  (November  28)  was  the 
outcome  of  the  deliberations  of  a  special  Parliamentary 
committee  appointed  that  year;  and  its  declared  object,  as 
set  forth  in  this  committee's  report,  was  "  to  put  a  stop 
to  the  decline  of  our  merchant  fleet,  to  allow  it  to  cope 
with  foreign  competition,  and  to  secure  for  the  inhabitants 
of  our  coast  needed  employment  and  profits  in  maritime 
pursuits."*  Three  years  before  (1890),  with  the  same  object 
in  view,  a  preliminary  step  had  been  taken  in  the  exemption 
of  all  iron  and  steel  steam  and  sailing  ships  from  trading 
and  income  taxes  while  engaged  in  ocean  voyages.* 

The  law  provided  two  classes  of  subsidies  —  a  trade 
bounty  and  a  navigation  bounty.  They  were  to  go  to  all 
steamers  and  sailing-ships  engaged  in  the  deepseas  trade  or 
long-coasting  trade,  and  not  receiving  mail  subventions.  At 
this  time  a  large  percentage  of  the  Austrian  steam  tonnage 
was  receiving  the  postal  subsidies,  and  most  of  this  tonnage 
was  owned  by  the  Austrian  Lloyd  Company.*  The  trade 
bounty  was  for  ships  making  long  voyages;  the  navigation 
bounty  for  those  engaged  in  coastwise  voyaging.  Ships 
•Meeker. 


46  MANUAL   OF   SHIP   SUBSIDIES 

entitled  to  the  trade  bounty  were  required  to  be  owned 
at  least  two-thirds  by  Austrian  subjects,  to  be  not  over 
fifteen  years  old,  and  registered  Al  or  A2.  The  rates  were 
thus  fixed:  for  the  first  year  after  launching,  iron  or  steel 
steamers,  six  florins  ($2.44)  per  ton,  iron  or  steel  sailing- 
ships,  four  florins  and  fifty  kreutzers;  wooden  or  composite 
(part  iron)  sailing-ships,  three  florins.  After  the  first  year 
the  rate  was  to  be  reduced  five  per  cent  annually  till  the 
end  of  the  fifteenth  year.  As  an  inducement  to  employ 
home  work  and  to  utilize  home  materials,  the  bounty  was 
to  be  increased  by  ten  per  cent  for  iron  or  steel  sailing-ships 
built  in  the  Austrian  ship-yards,  and  by  twenty-five  per  cent 
if  at  least  one-half  of  the  materials  used  in  the  construction 
were  of  Austrian  origin.  If  more  than  one  year  had  elapsed 
since  the  launching  of  a  ship  otherwise  entitled  to  a  bounty, 
a  deduction  of  fifteen  per  cent  was  to  be  made  for  each  year 
that  had  passed.  The  navigation  bounty  was  fixed  at  five 
kreutzers  per  net  ton  of  capacity  for  every  hundred  nautical 
miles  sailed.  The  exemption  from  the  production  and  in- 
come taxes,  granted  in  1890,  was  extended  for  a  term  of 
five  years  from  January  1,  1894.  The  law  was  to  be  in 
force  for  ten  years. 

As  the  end  of  the  term  of  this  law  was  approaching 
ship-owners  began  agitating  for  its  renewal  with  an  increase 
in  the  subsidy.  Since  its  enactment  the  production  of  steam 
tonnage  had  been  accelerated,  and  the  decline  of  sail  tonnage 
had  been  checked;  but  no  marked  change  in  the  merchant 
marine  generally  had  been  manifest.*  Of  the  bounties  paid 
the  Austrian  Lloyd  had  received  a  large  share  in  behalf  of 
their  ships  which  were  not  directly  under  contract  for  the 
mail  service.  The  remainder  went  to  the  various  companies 
controlling  the  coast  and  river  trade.  The  ten  to  twenty-five 
per  cent  addition  to  the  trade  bounty  for  ships  built  in 
domestic  yards  and  from  domestic  materials,  finally  went 
for  the  most  part  to  a  single  large  building  concern  at 
Trieste.  While  most  of  the  Austrian  tonnage  was  yet  of 
foreign  build,  mostly  constructed  in  British  yards,  the  in- 
crease in  the  proportion  of  domestic  build  was  considerable 

*U.  S.  Con.  Kept.,  no.   282,  March,  1904,  pp.   645-646. 


MANUAL   OF   SHIP   SUBSIDIES  47 

after  1893.  The  greater  part  of  the  materials  used  was 
Austrian  product.  Consequently  allied  industries  increased 
with  this  increased  output  of  home  ships.* 

At  length  in  1907  (February  23)  a  new  law  was  enacted 
increasing  the  navigation  and  construction  bounties.  For 
the  navigation  subsidies,  to  go  to  shipowners  according  to 
the  tonnage  of  the  ships  and  the  number  of  miles  run, 
allotments  were  thus  made:  for  the  first  year,  $852,600;  for 
1908,  $893,200;  1909,  $954,100;  1910,  $1,015,000;  1911, 
$1,075,000;  and  for  the  five  years  remaining  of  the  term 
of  the  law  — which  ends  December  31,  1916  — $1,136,800  a 
year.  The  construction  subsidies  were  raised  as  follows: 
for  ships  launched  after  July  1,  1907:  steamers  built  of  iron 
and  steel  $8.12  per  gross  ton,  sailing-ships  of  iron  and  steel, 
$2.84;  for  marine  engines,  boilers,  pipes,  and  auxiliary 
apparatus,  $1.62  per  220.46  pounds.  To  entitle  a  ship  to 
these  bounties  fifty  per  cent  of  the  materials  used  in  its 
construction  must  be  home  product.f 

This  year  (1907)  also  the  annual  postal  subventions  to 
the  Austrian  Lloyd  were  increased  $1,486,586,  for  a  further 
period  of  fifteen  years.  This  contract  called  for  an  in- 
crease of  speed  to  the  Levant  and  the  Orient.  The  Suez 
Canal  tolls  were  to  be  paid  by  the  Government  as  before. 

The  Kingdom  of  Hungary  grants  bounties  to  Hungarian 
ships,  or  ships  owned  in  greater  part  by  Hungarian  subjects, 
independently  of  the  Imperial  Government.  Her  first 
general  bounty  law  was  also  enacted  in  1893  and  was  limited 
to  ten  years.  The  subsidies  granted  were  of  two  classes  — 
a  premium  on  purchase,  and  a  mileage  bounty.  The  pur- 
chase subsidy  was  based  on  net  tonnage  and  was  payable 
for  a  term  of  fifteen  years  from  the  date  of  the  ship's 
launching,  reduced  each  succeeding  year  by  seven  per  cent; 
the  mileage  subsidy,  for  the  same  term,  was  in  proportion 
to  the  length  of  the  voyages  made  "  in  the  interest  of 
national  commerce  whether  to  or  from  Hungarian  ports." 
The  premiums  on  purchase  were  thus  fixed  for  the  first 

•Meeker. 

tU.   S.   Con.  Rept.,  no.   320,  July,  1907,  p.   180. 


48  MANUAL   OF    SHIP    SUBSIDIES 

year:  for  vessels  employed  in  long-distance  coasting  trade  — 
sailing-ships,  six  krone  (each  20  cents) ;  steamers,  nine  krone 
per  ton;  employed  in  deep-sea  trade,  —  sailing-ships,  nine 
krone;  steamers,  twelve  krone  per  ton.  Iron  or  steel  ships 
rated  first  class  were  entitled  to  these  bounties.  The  mileage 
subsidy  was  fixed  at  five  hellers  per  ton,  per  hundred 
nautical  miles  run.  It  was  offered  only  for  voyages  "  to 
places  where  no  company  in  receipt  of  State  subsidies  is 
obliged  to  maintain  regular  communications;"  and  it  was 
not  to  be  given  for  "petty  coasting  trade."* 

This  law  was  succeeded  by  an  act  of  1895  granting 
construction  bounties,  with  the  intent  of  fostering  domestic 
shipping  and  the  use  of  domestic  material.  The  rates  were 
proportioned  according  to  the  amount  of  foreign  or  domestic 
material  used,  construction  with  domestic  product  receiving 
the  highest  bounty.  These  rates  were:  for  iron  or  steel 
hulls,  thirty  to  sixty  krone  per  ton;  for  wooden  ships,  ten 
to  twenty-five  krone  per  ton;  for  engines  and  auxiliary 
machinery,  ten  to  fifteen  krone  per  ton  of  materials  used; 
for  boilers  and  pipes,  six  to  ten  krone  per  ton  of  material. 
The  total  amount  to  be  paid  out  yearly  was  limited  to  the 
modest  figure  of  two  hundred  thousand  krone  ($40,600). f 

The  law  of  1895  in  reality  was  not  effective,  for  ships 
of  the  Hungarian  merchant  marine  continued  to  be  built  in 
foreign  parts  —  mainly  in  British  yards;*  and  while  the 
carrying  capacity  had  considerably  increased,  the  tonnage 
had  continued  to  decline.*  By  1904  the  situation  had  be- 
come so  unsatisfactory  that,  as  the  American  consul  at 
Budapest  wrote,  the  passing  of  a  new  navigation-develop- 
ment law  by  Hungary's  Parliament  had,  it  was  believed, 
become  a  pressing  necessity  .£ 

In  1909  the  Austrian  Government  guaranteed  a  maximum 
sum  of  one  million  crowns  (approximating  $200,000)  annu- 
ally to  the  Austro-American  Shipping  Company  for  their 
service  between  Trieste  and  Brazil  and  Argentine  ports. 
Should  the  service  tend  successfully  to  promote  home  in- 

*  Meeker. 

tMeeker.     Also   Parl.   papers,   Com.,   1909,   no.   4,   p.   8. 

JU.    8.    Con.    Kept.,   no.    283,   April,    1904,   p.    304. 


MANUAL   OF   SHIP   SUBSIDIES  49 

dustries  and  agriculture,  this  subsidy  was  to  be  increased, 
the  amount  of  increase  to  depend  upon  the  amount  of  cargo 
carried  in  excess  of  a  certain  minimum.  The  contract  was 
to  run  for  fifteen  years  from  January  1,  1910.  The  service, 
beginning  with  sailings  three  times  a  month,  was  to  become 
weekly  on  January  1,  1911.* 

The  total  Austria-Hungary  tonnage  in  1910-11  was  re- 
corded at  779,029  tons.f 


•U.   S.  Con.   Kept.,  no.   352,  Jan.,   1910,  p.   45. 
tLloyd's   Register,   1910-11. 


CHAPTER   VII 
ITALY 

EARLY  after  its  establishment  in  1861  the  Kingdom 
of  Italy  adopted  a  subsidy  system  with  the  object 
of    reviving    and    upbuilding    the    then    languishing 
Italian  merchant  marine.    This  policy  was  instituted  in  1866 
with  the  grant  of  premiums  on  the  construction  of  wooden 
ships.    At  the  same  time  materials  used  in  the  construction, 
repair,  or  enlargement  of  ships  were  made  duty-free.* 

For  a  while  under  these  conditions,  before  iron  ships 
had  come  much  into  use,  the  merchant  marine  prospered. 
Then  it  again  began  to  languish;  and  in  1881  the  promulga- 
tion of  the  French  general  bounty  law  was  made  the  special 
occasion  for  considering  the  adoption  of  a  similar  measure.f 
The  draft  of  a  bill  modelled  after  that  law  was  promptly 
introduced  in  the  Chamber  of  Deputies,  in  February.  But 
with  its  consideration  such  perplexities  arose  that  at  length 
the  whole  subject  was  referred  to  a  commission  of  inquiry, 
to  investigate  and  report  a  more  satisfactory  one.  The 
result  of  this  inquiry  was  a  bill  which  became  law  December 
6,  1885,  to  continue  in  force  for  ten  years. 

This  law  provided  for  general  construction  subsidies,  on 
the  following  scale:  for  steamers  and  sailing-ships  built  of 
iron  or  steel,  sixty  lire  ($11.58)  per  .gross  ton;  for  steam 
or  sailing  ships  built  of  wood,  fifteen  lire;  for  galleggianti 
(floating  material:  the  term  signifying  merchant  ships  navi- 
gating the  Italian  seaboard,  rivers,  and  lakes,  but  not  pro- 
vided with  certificates  of  nationality),  of  iron  or  steel, 
thirty  lire;  for  construction  and  repairs  of  marine  engines, 
ten  lire  per  quintal;  for  marine  boilers,  six  lire  per  hundred 
kilograms  of  weight.  These  bounties  were  to  be  increased 
from  10  to  20  per  cent  (according  to  the  degree  of  speed 
and  other  desirable  qualities  shown)  for  steamers  built  on 

'Meeker. 

tBismarck's   Memorial   to   the   German  Reichstag,    April,   1881. 
50 


MANUAL   OF   SHIP    SUBSIDIES  51 

plans  approved  by  the  Government  engineers  as  to  be 
convertible  into  cruisers,  showing  a  speed  of  not  less  than 
fourteen  knots  an  hour,  and  with  sufficient  coal-carrying 
space  to  steam  four  thousand  miles  at  ten  knots.  The  law 
was  applicable  to  ships  bought  abroad  as  well  as  those  of 
domestic  build.  But  it  forbade  the  sale  or  charter  to  a 
foreigner  of  any  steamer  upon  which  the  bounty  had  been 
paid,  except  by  Government  permission.  The  laws  of  1866 
granting  premiums  and  free  entry  to  shipbuilding  materials 
were  suspended  during  the  ten  years'  term  of  this  act.* 

In  1888,  a  new  tariff  of  the  previous  year  (July,  1887) 
having  increased  the  customs  duties  on  shipbuilding  ma- 
terials, additional  bounties  on  construction  and  repair  were 
granted  by  a  royal  decree  to  offset  these  disadvantages  to  the 
shipbuilders.  A  provision  was  added  for  the  payment  of 
fifty  lire  per  gross  ton  for  construction  of  war-ships,  and 
eight  and  a  half  lire  per  horsepower  for  engines,  nine  and  a 
half  lire  per  quintal  for  boilers,  and  eleven  lire  per  quintal 
for  other  apparatus,  to  be  used  in  war-ships.  Navigation 
bounties  were  also  added  to  Italian  ships  as  follows:  0:65 
lire  per  gross  ton  for  every  thousand  sea  miles  run  beyond 
the  Suez  Canal  or  the  Strait  of  Gibraltar  to  or  from  ports 
outside  of  Europe;  the  same  for  ships  sailing  between  one 
continent  with  its  adjacent  islands  and  another  continent 
with  its  adjacent  islands,  outside  the  Mediterranean.  Sail- 
ing-ships of  above  fifteen  years  of  age  were  ineligible  to 
these  bounties;  so  also  were  mail-route  steamers.t 

In  1896,  after  the  expiration  of  this  law,  a  new  law  was 
enacted  (July  23)  closely  modelled  upon  it.  The  con- 
struction subsidies  were  the  same,  except  that  war-ships 
built  for  foreign  countries  were  debarred  from  receiving 
bounties.  The  navigation  subsidy  per  gross  ton  for  every 
thousand  sea  miles  sailed  beyond  the  Suez  Canal  and  the 
Strait  of  Gibraltar  was  increased  to  0.80  lire,  the  rate  to  be 
diminished  by  ten  centimes  for  steamers  and  fifteen  centimes 
for  sailing-ships  every  three  years.  An  important  addition 
was  the  reenactment  of  the  customs  rebates  on  shipbuilding 
materials.  This  law  was  also  to  be  in  force  ten  years.f 

*U.  S.  Con.  Kept.,  Jan.,  1890,  no.  112,  pp.  61-62.     Also  Meeker. 
tMeeker. 


52  MANUAL   OF   SHIP   SUBSIDIES 

In  1900  (November  16)  a  royal  decree  was  issued  modify- 
ing the  law  of  1896  in  several  particulars.  No  bounty  was 
hereafter  to  be  allowed  to  vessels  built  in  Italian  yards  for 
foreigners.  The  customs  drawbacks  were  abrogated,  and 
in  place  of  them  was  granted  a  bounty  of  five  lire  per 
quintal  of  metal  used  in  repairs.  A  bounty  of  fifty-five  lire 
per  gross  ton  was  offered  for  iron  or  steel  steamers  showing 
a  speed  of  above  fifteen  knots;  fifty  lire,  for  steamers 
speeding  twelve  to  fifteen  knots;  forty-five  lire,  for  steamers 
or  sailing-ships  with  speed  below  twelve  knots;  and  thirteen 
lire  per  net  ton  for  modern  hulls.  The  navigation  subsidies 
per  gross  ton  per  thousand  miles,  were  thus  fixed:  for 
steamers,  forty  centimes  up  to  the  fifteenth  year  after  con- 
struction; for  sailing-ships,  twenty  centimes  up  to  the 
twenty-first  year  after  construction.  The  yearly  distances 
run  for  which  the  bounties  were  to  be  paid  were  limited  to 
thirty-two  thousand  miles  for  a  steamer  below  twelve  knots; 
forty  thousand  for  one  of  twelve  to  fifteen  knots;  fifty 
thousand  above  fifteen  knots,  and  ten  thousand  for  a  sailing- 
ship.  All  Italian  ships  were  eligible  to  this  bounty;  foreign 
ships  were  debarred.  The  maximum  expenditure  for  all  the 
bounties  was  limited  to  ten  million  lire  ($2,000,000)  a  year. 

In  1910  (May)  a  new  subsidy  bill  was  enacted  providing 
for  the  continuance  of  the  arrangement  under  the  measure 
of  1900,  with  a  few  immaterial  modifications.*  Early  in 
1911  the  Government  was  reported  to  have  in  readiness  ten 
bills  looking  to  the  support  of  domestic  shipping  and  ship- 
building. Eight  of  these  had  relation  to  the  increase  of 
subsidy  on  the  Italian  mail  and  cargo  service  of  the 
Mediterranean.  Other  routes  subsidized  included  lines  to 
Central  America,  Chile,  Canada.  Domestic  shipbuilding  was 
to  be  aided  to  the  extent  of  twelve  hundred  and  forty 
thousand  dollars.f 

Italy's  mail  subvention  system  dates  from  1877,  when  the 
Italian  steamship  companies  by  a  convention  (July  15) 
consolidated  with  the  Government.!  All  the  lines  receiving 

*U.  S.  Consul  J.  K.  Wood,  Venice,  in  Daily  Con.  Repts.,  no.  30, 
Aug  9,  1910. 

tU.  S.  Consul  T.  St.  J.  Gaffney,  Dresden,  Germany,  in  Daily  Con. 
Repts.,  no.  83,  April  10,  1911. 

{Meeker. 


MANUAL   OP   SHIP   SUBSIDIES  53 

the  mail  subsidy  came  to  be  owned  by  a  single  powerful 
corporation,  the  Italian  General  Navigation  Company. 
While  the  rates  paid  per  mile  are  not  so  high  as  those 
paid  by  several  other  countries,  the  requirements  as  to  size 
of  vessels,  speed,  and  amount  of  service  to  be  rendered,  are 
less  exacting.  Accordingly  these  subventions  are  in  fact, 
as  Professor  Meeker  recognizes  them,  "  partly  in  the  nature 
of  concealed  bounties."  In  1879  the  Government  spent  in 
these  subventions  a  total  equalling  $1,593,214.  By  1889  the 
total  had  only  slightly  increased,  the  amount  that  year 
being  $1,849,392.  In  1908  the  total  was  $2,328,917.  The 
mail  steamships  are  required  to  carry  government  civil  and 
military  employees  at  half  price. 

Previous  to  1896  the  Italian  General  Navigation  Com- 
pany owned  more  than  half  of  the  Italian  steam  tonnage, 
and  most  of  the  large  steamships.*  After  1896  the  sail 
tonnage  steadily  increased.  In  1905  it  was  recorded  that 
"  the  Italian  flag  now  flies  over  some  of  the  best  modern 
transatlantic  liners  in  the  port  of  New  York;  the  Mediter- 
ranean is  full  of  Italian  ships;  and  the  Lloyd  Italiano  has 
five  new  ten-thousand-ton  steamers  nearly  ready  for  service 
in  South  America."f  Between  1890  and  1910  the  Italian 
gross  tonnage  increased  from  809,598  tons  to  1320,653  tons.£ 

•Meeker. 

tU.  S.  Senate  Kept.,  no.   10,  59th  Cong.,  1st  sess. 

JLloyd's  Register,    1910-11. 


CHAPTER   VIII 
SPAIN  —  PORTUGAL 

SPAIN  instituted  a  ship-construction  bounty  system 
in  1880,  when  her  merchant  marine  was  languishing, 
and  in  1886  a  comprehensive  system  of  mail  subven- 
tions, contracting  for  the  whole  ocean  service  with  a  single 
steamship  company,  La  Compania  Transatlantica  Espanola. 

Previous  to  1886,  for  a  quarter  of  a  century  and  more, 
postal  subventions  had  been  given  to  private  commercial 
houses,  or  individuals,  providing  steam  communication  with 
the  Spanish  colonies  and  foreign  ports;  but  much  of  the 
service  during  that  period  had  been  performed  by  this 
company  through  cessions  from  the  holders  of  the  contracts. 
Before  the  adoption  of  the  private  contract  system,  the 
service  to  the  colonies  had  been  performed  by  the  first 
regular  steamship  line  between  the  Peninsula  and  the 
Antilles  (in  1850),  established  at  the  State's  expense.  The 
ships  of  this  line  were  all  under  the  command  of  officers 
of  the  navy,  and  performed  various  services  for  the  Govern- 
ment besides  carrying  the  mails  and  despatches. 

Under  the  contract  of  1886  (ratified  by  the  Cortes  in 
1887)  the  company  were  to  furnish  all  the  mail  steam  com- 
munication between  the  Peninsula  and  the  colonies  and 
possessions,  and  foreign  ports,  for  a  total  maximum  sub- 
vention of  8,445,222  pesetas  ($1,689,044)  annually.  The 
subsidy  was  calculated  on  the  number  of  nautical  miles  run. 
The  total  sum  was  distributed  among  the  budgets  for  the 
Peninsula  and  the  several  colonies.*  In  1909  the  subvention 
was  redistributed  over  the  various  lines,  the  total  amounting 
in  round  numbers  to  $1,665,600.  The  contract  went  as  a 
whole  also  to  the  Spanish  Transatlantic  Company,  to  run 
for  twenty  years.  A  particular  requirement  was  that  the 
company  must  favor  Spanish  trade  in  every  possible  way.f 

*U.  S.   Con.  Kept.,  no.  112,  January,  1890,  pp.  54-56. 
tU.   S.    Vice  Con.   Gen.    William   Dawson   jr.,   Con.    Repts.,   no.    349, 
Oct.,    1910. 

54 


MANUAL   OF   SHIP   SUBSIDIES  55 

The  first  construction  subsidy  law,  that  of  1880  (June  25), 
granted  a  bounty  of  forty  francs  ($7.72)  per  measured  ton 
of  2.83  cubic  metres  on  all  ships  built  in  Spain.  All  tariff 
duties  paid  on  imported  materials  for  building,  careening, 
or  repairing  ships  or  their  machinery,  were  to  be  refunded 
by  the  Government.* 

During  the  decade  between  1880  and  1890  the  Spanish 
marine  slowly  increased.  Further  to  foster  it,  in  1895  a 
more  general  subsidy  law  was  enacted.  This  act  granted  a 
construction  subsidy  of  forty  pesetas  ($7.72)  per  gross  ton 
for  wooden  ships;  seventy-five  pesetas  ($14.48),  for  iron  and 
steel  steamers;  and  fifty-five  pesetas  ($10.62),  for  ships 
of  mixed  construction  and  for  sailing-ships  of  iron  and 
steel.f 

The  year  following  the  passage  of  this  law  was  marked 
by  rapid  expansion  in  the  national  marine.  Then  came  a 
more  rapid  decline.  This  was  due,  it  is  assumed,  to  in- 
creased taxes,  and  business  depression  occasioned  by  the 
colonial  wars,  involving  enlarged  Government  expenditures 
and  the  cutting  off  of  much  colonial  trade.f  During  the 
war  with  the  United  States  (1898)  Spain  lost  eighteen  large 
steamers  of  31,316  tons.  After  that  war,  with  the  develop- 
ment of  her  national  resources,  the  Spanish  marine  again 
began  rapidly  to  grow.f 

In  1909  (law  of  June  14)  the  system  was  extended  with 
the  addition  of  general  navigation  bounties  calling  for  an 
annual  expenditure  of  2,750,000  pesetas  ($530,750).  For 
ships  making  monthly  sailings  to  various  named  points, 
among  them  Brazil,  Uruguay,  and  the  Argentines,  and  semi- 
weekly  sailings  to  Algeria,  bounties  were  provided  ranging 
from  seven  to  seventeen  cents  per  ton  gross  for  every 
thousand  miles  run,  to  continue  for  a  period  of  ten  years. 
Spanish  ships  manned  by  Spanish  crews  and  ranked  by 
maritime  agencies  as  first  class  were  made  eligible  to  them. 
All  ships  receiving  these  bounties  must  admit  naval  cadets 
and  perform  certain  services  for  the  Government.  To  ship- 
builders, as  off-set  to  the  duties  on  imported  materials  which 

«U.    S.   Con.   Repts.,   1890. 
tMeeker. 


56  MANUAL   OF   SHIP   SUBSIDIES 

they  must  pay,  bounties  for  port  materials  as  well  as  for 
ships  were  granted  by  this  law.  The  construction  subsidies 
were  increased  to  $13.84  per  gross  ton  for  wooden  ships 
not  possessing  their  own  motor  power,  and  $17.30  self- 
propelling;  $20.76  for  iron  or  steel  ships  without  motor, 
$27.68  for  ships  for  freight  only,  $29.41,  freight  and  pas- 
sengers; and  $32  passengers  only.  Ten  per  cent  of  the 
bounties  for  passenger  ships  was  to  be  added  for  each  knot 
made  above  fourteen  per  hour.  The  sale  of  a  ship  to  a 
foreigner  within  two  years  after  the  ship's  construction 
was  made  invalid  unless  about  ,".  third  of  the  bounty  received 
be  repaid.  Ships  built  abroad  for  Spanish  citizens  were  to 
be  relieved  of  certain  duties  "provided  it  appears  that  it 
was  absolutely  necessary  that  they  be  built  abroad."* 

The  total  amount  paid  in  mail  subventions  in  1910  was 
$1,858,186;  in  navigation  subsidies,  $1,291,826.  The  total 
Spanish  tonnage  the  same  year  comprised  579  vessels  of 
765,460  tons.f 

Portugal  grants  postal  subventions  of  comparatively 
small  amounts  to  three  steamship  companies  which  perform 
all  her  mail  carrying.  A  move  toward  the  institution  of  a 
general  subsidy  system  was  made  in  1899,  when  a  bill  was 
before  the  Cortes  providing  construction  and  navigation 
bounties  for  the  encouragement  of  domestic  shipbuilding  and 
ship-using;  but  this  measure  was  not  enacted.  In  1911  the 
republic  offered  a  subsidy  of  one  thousand  dollars  per 
voyage  in  either  direction  for  steamship  service  between 
Lisbon  and  New  York,  with  call  at  the  Azores,  the  contract 
to  run  for  three  years.!  Portugal  controls  her  shipping 
service  with  her  colonies,  the  trade  with  them  being  re- 
stricted to  the  Portuguese  flag.**  Her  total  tonnage  is 
small:  in  1910  only  110,183  tons.ft 

*U.   S.  Con.  Kept.,  no.  349,   Oct.,  1909. 
tLloyd's  Register,  1910-11. 
JDaily    Con.    Repts.,    no.    106,    May    1,    1911. 
**Meeker.     Also   Parliamentary   papers. 
ftLloyd's   Register,    1910-11. 


CHAPTER  IX 
DENMARK  —  NORWAY  —  SWEDEN 

DENMARK  pays  postal  subventions  to  two  steamship 
companies  for  carrying  the  mails  to  Sweden  and  to 
Iceland,  and  "  trade "  subsidies  to  other  companies 
to  encourage  particularly  the  export  trade.    The  latter  are 
payments  directly  for  reductions  in  freight  rates,  which  are 
supervised  by  the  Government.*     The  postal  subventions  are 
not  large,   and   they   are   generally  accepted   as   only   fair 
remuneration  for  service  rendered.f 

Norway  and  Sweden  both  give  subsidies  for  mail  carriage 
solely,  and  grant  no  direct  bounties  on  shipping.  Both, 
however,  undertake  the  furtherance  of  commerce  and  naviga- 
tion through  "  State  contributions,"  in  the  form  of  loans  to 
shipowners  from  Government  funds.J  Such  aid  has  been 
granted  to  several  steamship  lines.  In  1910  the  Swedish 
Government  granted  a  loan  equivalent  to  half  a  million 
dollars  American  money  toward  the  capital  of  a  new  line 
between  Swedish  ports  and  New  York,  Philadelphia,  and 
Baltimore.**  Shipping  is  exempt  from  taxation  in  both 
countries.ff  The  Swedish  tonnage  in  1910  stood  at  a  total 
of  1472  vessels  of  918,079  tons.it 

In  Norway  the  laws  put  no  restriction  upon  shipowners 
as  to  purchase  in  any  market.  Most  of  her  steam  tonnage 
is  foreign-bought,  and  largely  second-hand.  Her  merchant 
fleet,  however,  consists  for  the  greater  part,  of  wooden 
sailing-ships,  and  these  are  mostly  of  domestic  build.ft 
Besides  the  mail  subsidies  the  Government  grant  "  trade " 

*Meeker. 

tParl.   papers. 

tMeeker. 

»*U.    S.   Con.    Kept.,   no.    82,    1910,    p.    106. 

ttMeeker. 

^Lloyd's    Register,    1910-11. 

57 


58  MANUAL   OF    SHIP   SUBSIDIES 

subsidies  to  some  forty  Norwegian  steamship  companies  to 
enable  them  to  maintain  routes  to  various  foreign  ports. 
These  subsidies  amount  to  about  half  a  million  dollars 
annually.*  In  1910  Norway  stood  in  tonnage  fourth  among 
European  maritime  countries:  her  total  tonnage  being 
2,014,533  tons.f  Norway  has  by  far  the  largest  percentage 
of  sea-faring  population,  and  her  mariners  are  found  in  the 
crews  of  all  nations  in  Europe  and  America. 

*  Report  of   (U.  S.)   commissioner  of  navigation  for  1909. 
tLloyd's  Register,   1910-11. 


CHAPTER   X 
RUSSIA 

IN  Russia  steamship  lines  were  early  subsidized  with 
mileage  bounties,  besides  receiving  postal  subventions; 
and  later  the  Government  adopted  the  policy  of  return- 
ing the  Suez  Canal  tolls  to  the  subsidized  lines.  The  mileage 
subsidies  are  direct  bounties  avowedly  for  the  encourage- 
ment of  Russian  navigation,  and  are  very  large.* 

In  1898  a  Government  commission,  appointed  to  consider 
and  report  upon  the  state  of  the  empire's  mercantile  marine, 
declared  that  Russia  was  losing  a  vast  sum  annually 
through  the  lack  of  a  sufficient  commercial  fleet  of  her  own, 
and  yet  no  progress  seemed  to  be  making  toward  increas- 
ing her  tonnage.  To  remedy  this  unsatisfactory  condition 
the  commission  suggested  the  removal  of  the  duty  on  ships 
built  abroad  for  Russia,  and  the  free  admission  of  all 
material  necessary  for  ship  construction.f 

Favoring  laws  followed.  By  a  measure  of  July  that  year 
(1898)  ships  bought  abroad,  if  destined  for  the  foreign 
sea-borne  trade,  were  exempted  for  a  period  of  ten  years 
from  the  heavy  duties  levied  on  such  vessels.*  The  next 
year  (1899)  the  coasting  trade,  reserved  exclusively  for 
Russian  ships,  was  extended  to  include  navigation  between 
any  two  Russian  ports  in  any  seas;  and,  further  to  restrict 
this  trade  to  subjects  of  the  empire,  it  was  enacted  that 
ships  engaged  in  it  must  be  manned  exclusively  by  Russian 
officers  and  seamen.* 

At  this  period  Russia's  shipping  industry,  outside  the 
Government  works  for  the  construction  of  battle-ships,  was 
of  comparatively  little  consequence.  In  the  few  extensive 
ship-yards  river  steamers,  tugs,  and  other  small  craft,  built 
from  Russian  materials  and  by  Russian  workmen,  were 

•Meeker. 

tU.  S.  Consul  Smith,  Moscow,  in  Con.  Kept.,  no.  216,  p.  149,  Sept., 
1898. 

59 


60  MANUAL   OF    SHIP   SUBSIDIES 

chiefly  turned  out.  The  materials  could  be  bought  cheaper 
abroad,  but  Russian  labor  was  cheaper.  According  to  the 
United  States  consul  at  St.  Petersburg,  the  wages  of  common 
workmen  were  then  from  fifty-one  to  sixty-four  cents  a 
day,  while  skilled  workmen  were  receiving  but  seventy-seven 
cents  to  one  dollar  a  day.* 

In  the  decade  1890-1901  the  amount  of  subsidies  ex- 
pended directly  to  encourage  shipping  increased  rapidly, 
and  the  tonnage  increased  in  extent  and  importance.  In 
1890-91  the  total  tonnage  stood  at  427,335  tons  of  which 
156,070  were  steam  and. 271,265  sailing  ships.  In  1902-03  a 
total  of  800,334  tons  was  reached,  of  which  556,102  were 
steam  and  244,232  sailing  ships.f 

In  1902  the  granting  of  bounties  in  the  form  of  loans 
to  ship-owners  was  proposed,  with  the  object  of  inducing 
them  to  buy  Russian  ships  built  of  Russian  materials  instead 
of  foreign  product.  The  scheme  contemplated  a  mortgage 
on  the  finished  ship  at  fifty  per  cent  of  the  actual  cost,  with- 
out interest,  to  cover  a  period  of  twenty  years,  the  loans 
to  be  in  equal  yearly  payments.  The  amount  of  the  bounty 
was  to  depend  upon  the  difference  between  the  cost  of 
home-built  and  foreign-built  ships.  The  loans  were  to  be 
made  only  on  first-class  sea-going  steamers.  The  plans  and 
specifications  were  to  be  approved  by  the  minister  of  finance 
before  building;  and  steamers  of  over  one  thousand  tons 
register  must  show  an  average  speed  of  not  less  than  ten 
knots  on  a  six  hours'  trial;  those  under  one  thousand  tons, 
of  not  less  than  eight  knots.  In  addition  to  the  loans  the 
Government  was  to  bear  part  of  the  expense  of  insurance. 
To  facilitate  the  export  of  Russian  goods  in  Russian-built 
ships,  a  rebate  was  allowed  of  half  the  expense  of  Russian 
coal  used  in  steamers  carrying  less  than  three-fourths  of  a 
full  cargo  on  export,  and  one-half  cargo  on  import.  It  was 
estimated  that  this  scheme  for  fostering  domestic  shipbuild- 
ing would  entail  smaller  drafts  on  the  national  treasury 

*U.  S.  Con.  Gen.  R.  T.  Greener,  St.  Petersburg,  in  U.  S.  Con. 
Kept.,  no.  236,  p.  91,  May,  1900. 

t  Report  of  The  Merchant  Marine  Commission  (U.  S.),  1905,  vol.  II, 
p.  947. 


MANUAL   OF   SHIP   SUBSIDIES  61 

than  would  the  granting  of  direct  construction  and  naviga- 
tion premiums.* 

Progress  was  checked  appreciably  by  the  war  with 
Japan  (1904-05).  But  the  year  after,  the  empire  was 
active  again  in  advancing  her  interests  in  the  East,  by 
systematically  granting  subsidies  to  steamship  lines  to 
various  Asiatic  points.f  By  1909  the  tonnage  had  been 
brought  to  a  total  of  700,959  tons,  approaching  that  of  the 
year  before  the  war.  Of  this  total  443,243  was  steam  ton- 
nage. The  greater  part  of  the  steam  fleet  was  foreign 
built,  only  167  of  the  total,  898  steamers,  being  of  Russian 
product.  The  largest  number  were  built  in  England  (341). 
Others  were  obtained  from  various  European  yards.  More 
than  ninety  per  cent  were  of  iron  and  steel.  Of  the  sailing- 
ships,  ninety  per  cent  were  home  product.!  In  1910  the 
total  tonnage  stood  at  887,325  tons.** 

The  mileage  subsidies  in  1910  were  going  principally  to 
eleven  steamship  companies;  the  postal  subventions  mainly 
to  four.  Those  receiving  the  mileage  subsidies  carry  the 
mails  and  Government  passengers  free.  The  largest  mileage 
subsidy  goes  to  the  Black  Sea  Navigation  Company,  the 
oldest  and  most  important  of  the  subsidized  lines  (founded 
in  1856,  with  Government  aid). ft  In  addition  to  the  subsidy 
the  Government  pays  back  the  Suez  Canal  tolls.  The  Rus- 
sian Volunteer  Fleet  stands  second  on  the  list  of  subsidy 
receivers.  This  is  practically  a  Government  affair.  It  was 
created  in  the  war-time  of  1877-78,  by  private  subscription, 
as  an  auxiliary  war  fleet;  and  was  reorganized  for  general 
service  in  1892.  The  members  of  the  board  of  managers 
are  State  nominees,  and  the  officers  and  crews  are  regarded 
as  employees  of  the  crown.Jj:  The  subsidy  is  fixed  at  six 
hundred  thousand  rubles  ($309,999)  a  year;  and  the  re- 

*U.  S.  Commercial  Agent  R.  T.  Greener,  Vladivostock,  in  U.  S. 
Con.  Repts.,  no.  265,  p.  218,  October,  1902. 

tSame,  no.   313,  p.   140,   October,  1906. 

+Con.  Gen.  John  H.  Snodgrass,  Moscow,  in  U.  S.  Con.  Repts.,  no. 
354,  pp.  32-33,  March,  1910. 

•"Lloyd's   Register,    1910-11. 

ttCon.    Gen.   Snodgrass,   Con.    Repts.,   no.    102,   Oct.,    1910. 

JtParl.  papers:  Report  of  com.  of  enquiry  into  Steamship  Sub- 
sidies, 1901. 


62  MANUAL   OF    SHIP    SUBSIDIES 

funded   Suez   Canal   tolls   amount  to   another  six  hundred 
thousand  rubles.* 

The  mileage  subsidies,  given  directly  to  foster  shipping, 
increased  rapidly  from  year  to  year  after  1890,  while  the 
postal  subventions,  for  mail  carriage  chiefly,  remained  prac- 
tically constant.f 

*List    given    in    Kept,    of    Mer.    Marine    Com.,    with    totals    paid    in 
1902-03,    vol.    2,   p.   946. 
tMeeker. 


CHAPTER  XI 
JAPAN  —  CHINA 

WHILE  France  is  the  bounty-giving  nation  par 
excellence,  Japan  is  a  pressing  second.  The 
development  of  a  modern  merchant  marine,  to- 
gether with  a  modern  navy,  was  among  the  first  under- 
takings of  the  awakening  empire  upon  her  assumption  of 
Occidental  civilization.  Adopting  what  seemed  to  her  states- 
men of  the  new  regime,  from  their  study  of  Western 
methods,  to  be  the  speediest  way  to  that  end,  she  started 
out  energetically  to  attain  it  through  lavish  money-grants 
from  the  national  treasury  for  the  establishment  of  steam- 
ship companies  of  her  own  people  in  coastwise  and  ocean 
service,  and  of  modernized  ship-yards  and  shipbuilders. 

The  initial  venture  resulted  in  the  creation  of  a  steam- 
ship monopoly.  This  was  the  subsidizing,  in  1877,  of  the 
pioneer  concern,  to  supply  steam  communication  between 
various  domestic  ports,  and  also  with  Siberia,  China,  and 
Corea.  It  was  founded  by  a  broad-visioned  Japanese  mer- 
chant, Jwasaki  Yataro,*  and  controlled  by  him.  To  break 
his  monopoly  the  Government  in  1883  set  up  a  rival  State- 
supported  company.*  After  a  period  of  "  desperate  com- 
petition "  and  warfare,  Jwasaki  persuaded  the  new  concern 
to  unite  with  his.  So  was  effected  a  community  of  interests 
after  the  most  approved  Western  pattern.*  By  this  union 
was  formed,  in  1885,  the  powerful  Nippon  Yusen  Kaisha 
(Japan  Mail  Steamship  Company),  which  remained  the 
most  powerful  of  Japanese  steamship  establishments,  with 
lines  running  to  the  same  ports  to  which  the  American 
steamers  run. 

Coincident  with  the  State-aiding  of  steamship  companies 
was  the  granting  of  liberal  postal  subvention.  Next  followed 
the  institution  of  a  general  subsidy  system,  frankly  designed 

•Meeker. 

63 


64  MANUAL   OF    SHIP   SUBSIDIES 

to  stimulate  domestic  shipbuilding  and  to  further  navigation 
by  Japanese  ships. 

This  system  was  embodied  in  two  acts  promulgated  in 
1896,  the  year  after  the  finish  of  the  Japan-China  War 
(1894-95),  when  the  merchant  marine  was  growing  pretty 
rapidly,  but  not  rapidly  enough  for  the  aspiring  nation. 
These  were,  a  Shipbuilding  Encouragement  Law,  the  aim 
of  which  was  to  stimulate  the  building  of  vessels  above  700 
tons;  and  a  Navigation  Encouragement  Law,  to  foster 
open-sea  navigation.  Their  model  was  the  French  system. 

These  laws  offered  construction  and  navigation  subsidies, 
and  also  made  provision  for  a  widely  extended  postal  service 
with  increased  postal  subventions.  The  construction  boun- 
ties were  available  for  "  any  company  composed  of  Japanese 
subjects  exclusively  as  members  and  shareholders  which 
shall  establish  a  ship-yard  conforming  to  the  requirements 
of  the  Minister  of  State  for  Communications,  and  shall 
build  ships."  The  rates  were  fixed  as  follows:  for  ships  of 
over  1000  tons,  twenty  yen  ($9.96)  per  gross  ton;  of  over 
700  and  under  1000  tons,  twelve  yen;  for  engines  built 
with  ships,  or  in  any  other  domestic  dock-yard,  with  the 
consent  of  the  Minister  of  Communications,  five  yen  per 
horsepower.  Japanese  materials  only  were  to  be  used, 
unless  the  Minister  of  Communications  should  give  permis- 
sion to  use  foreign  materials.  The  navigation  bounties  were 
granted  only  for  iron  and  steel  ships  owned  exclusively  by 
Japanese  subjects,  and  plying  between  Japan  and  foreign 
ports.  The  rates  in  this  class  were:  twenty-five  sen  (about 
12y2  cents)  per  gross  ton  per  thousand  miles  run  for  ships 
of  1000  tons  steaming  at  ten  knots  an  hour;  ten  per  cent 
added  for  every  additional  500  tons  up  to  6000  tons,  and 
twenty  per  cent  for  every  additional  knot  up  to  seventeen. 
Foreign-built  ships  less  than  five  years  old,  owned  by 
Japanese,  were  admitted  to  these  bounties.  The  postal 
routes  established  were  fifteen  in  number,  calling  for  an 
annual  expenditure  of  4,964,404  yen  (about  $2,482,202)  when 
in  full  operation.  The  payments  for  postal  service  were  to 
be  computed  at  the  mileage  rate  given  for  navigation. 
Previous  to  this  act  the  postal  subventions  had  amounted 


MANUAL   OF   SHIP   SUBSIDIES  65 

annually  to  nine  hundred  and  forty-five  thousand  yen  in 
1890  and  1891,  and  nine  hundred  and  thirty  thousand  yen 
in  the  subsequent  years.* 

The  effect  of  these  laws  was  to  stimulate  overproduction. 
The  Nippon  Yusen  Kaisha  ordered  eighteen  large  freight 
steamers  aggregating  88,000  tons.  Other  companies  doubled 
and  trebled  their  fleets.*  One  result  of  the  overproduction 
was  the  forcing  down  of  freights.  This,  together  with  the 
business  depression  of  1898-99,  brought  losses  to  the  ship- 
ping companies  despite  the  large  subsidies.  The  rapidly 
increasing  amounts  of  the  subsidies,  too,  were  giving  the 
Government  concern.  From  a  total  of  1,027,275  yen  in  1896 
the  sum  expended  annually  had  grown  by  1899  to  5,846,956 
yen.  The  total  paid  between  1896  and  1899  had  amounted 
to  13,133,440  yen,  about  $6,566,720.* 

Accordingly,  in  1899  (March),  a  law  was  enacted  modify- 
ing the  system.  The  navigation  bounties  on  foreign-built 
ships  were  reduced  by  half,  while  the  subventions  to  the 
postal  lines  were  fixed  at  certain  yearly  sums.  A  law  of 
1900  (February  23)  extended  the  postal  services.  Under 
these  laws  the  postal  subventions  reached  a  total  of  about 
5,647,811  yen  ($2,823,905)  a  year.  Of  this  total  the  Nippon 
Yusen  Kaisha' s  was  the  lion's  share,  —  4,299,861  yen,  about 
$2,149,930.* 

After  the  passage  of  these  laws  the  various  companies 
further  increased  their  tonnage,  but  the  merchant  marine 
grew  more  wholesomely  for  a  while.  In  1902  the  total 
tonnage  had  reached  934,000  tons,  and  the  Japanese  mer- 
cantile fleet  had  risen  to  the  position  of  eighth  in  the  world 
in  point  of  tonnage,  whereas  in  1892  it  was  only  thirteenth.f 
In  1907  the  United  States  consul  at  Yokohama  wrote:  "The 
building  of  ships  of  over  ten  thousand  tons  in  Japanese 
yards  is  now  quite  common.  .  .  .  The  war  [with 
Russia]  has  given  a  great  impetus  to  the  shipbuilding  and 
dock-yard  industry  which  has  made  remarkable  progress 
during  the  last  few  years.J 

That    year    (1907)    the    Government    brought    forward 

*Meeker. 

tU.    S.   Con.   Kept.,   no.    282,    March,    1904. 

tU.    S.    Con.    Kept.,    no.    316,    Jan,    1907,    pp.    92-93. 


66  MANUAL   OF    SHIP   SUBSIDIES 

several  ship-subsidy  bills  making  provision  for  further  Japan 
sea  services.*  In  1908  the  amount  of  State  aid  to  the  mer- 
chant marine  had  increased  to  an  equivalent  of  $6,170,566 
and  additional  amounts  were  asked  for,  one  for  the  line 
to  South  America.t  The  budget  for  1908-09  carried  the 
largest  amounts  yet  devoted  by  Japan  to  ship  subsidizing. 
At  the  end  of  1908  official  statistics  placed  the  number  of 
steamers  at  1618,  with  a  gross  tonnage  of  1,153,340.42.  Of 
these,  one  hundred  and  one  were  steamers  of  more  than 
three  thousand  tons.f 

In  1909  a  new  subsidy  system  was  adopted  (the  laws 
of  1896  revised),  to  go  into  effect  January  1,  1910.  The 
fixed  navigation  bounties  granted  by  the  old  system  on 
specified  routes  were  abolished,  and  a  general  subsidy  offered 
open  to  all  steamships  conforming  to  the  provisions  of  the 
new  law.  The  subsidized  open-sea  routes,  however,  were 
limited  to  four  —  the  European,  the  North  American,  South 
American,  and  Australian;!  and  coasting  srevices  in  the 
Far  East  were  not  affected.  Among  other  conditions  im- 
posed on  the  beneficiaries  were  the  requirements  that 
steamers  must  carry  more  than  one-half  their  maximum 
load;  that  each  must  have  a  wireless  telegraph  outfit,  this, 
however,  instituted  at  the  Government's  expense;  that  the 
Department  of  Communications  be  furnished  with  infor- 
mation as  to  freights  and  passenger  rates;  and  that  proper 
terminal  facilities,  as  piers,  warehouses,  lighters,  be  pro- 
vided by  the  subsidized  companies.**  The  steamers  receiving 
the  full  subsidy  must  be  home-built,  of  steel,  of  over  3000 
tons  gross,  and  showing  a  speed  of  at  least  twelve  knots 
per  hour.  The  rate  was  fixed  at  fifty  sen  per  gross  ton 
for  every  thousand  nautical  miles,  and  ten  per  cent  of  this 
sum  added  per  additional  speed  of  one  nautical  mile  an 
hour,  according  to  the  conditions  of  the  route.  Upon  a 
vessel  the  age  of  which  exceeds  five  years  the  subsidy 

*Con.  Gen.  H.  B.  Miller,  Yokohama,  in  Con.  Repts.,  no.  32,  pp. 
120-121,  May,  1907. 

fVice  Con.  Gen.  E.  G.  Babbitt,  Yokohama,  in  Con.  Repts.,  no.  344, 
p.  216,  May,  1909. 

JJapan   Year   Book,  1911. 

**U.  S.  Con.  Gen.  Thomas  Sammons,  Yokohama,  in  Daily  Con. 

Repts.,  no.  38,  Aug.  17,  1910. 


MANUAL   OF   SHIP   SUBSIDIES      •  67 

decreases  five  per  cent  each  year  till  the  age  of  fifteen  is 
reached,  when  it  ceases.  Foreign-built  steamers  under  five 
years  of  age,  which  may  be  put  in  service  with  the  sanction 
of  the  Government  authorities,  are  entitled  to  half  of  the 
subsidy.  The  construction  subsidies  were  arranged  in  two 
classes,  and  each  class  in  four  grades.*  The  rates  were 
slightly  increased  over  those  of  the  law  of  1896,  and  their 
benefits  were  limited  to  steel  vessels  of  over  1000  tons 
instead  of  700  tons. 

The  total  appropriations  for  ship  subsidies  in  the  budget 
for  1911-12  amounted,  in  American  money,  to  $6,845,995, 
of  which  $6,294,020  were  for  navigation,  and  $551,975  for 
construction  subsidies:  an  increase  of  $478,387  in  the  former 
class  over  the  appropriation  of  the  previous  year,  and  a 
decrease  in  the  latter  class  of  $6,835.f 

The  total  Japanese  tonnage  in  1910  stood  at  1,149,200 
tons.£  The  Nippon  Yusen  Kaisha  practically  owns  nine- 
tenths  of  the  ocean-going  steamships  flying  the  Japanese 


China,  too,  taking  on  Western  ways,  is  emulating  Japan 
in  establishing  a  modern  merchant  marine.  The  Govern- 
ment is  giving  State  aid  to  native  steamship  companies,  and 
subsidizing  ship-yards.  According  to  the  United  States 
consul-general  at  Hongkong  the  Government  is  now  (1911) 
to  furnish  half  of  the  amount  of  an  extension  of  the  capital 
of  the  Chinese  Merchants'  Steam  Navigation  Company  to 
twenty  million  taels  (about  $12,600,000  gold),  and  thirty 
additional  steamers  of  modern  type  are  to  be  built  for 
service  —  ten  on  foreign  routes,  including  a  route  to  the 
United  States,  and  twenty  on  routes  between  Chinese  ports; 
while  a  new  ship-yard  is  to  be  set  up  at  Shanghai  under 
Government  auspices,  capitalized  at  five  million  taels  (about 
$3,200,000  gold). 

*Japan  Year  Book,   1911. 

tU.  S.  Ambassador  Thomas  J.   O'Brien,  Tokyo,  in  Daily  Con.  Repts., 
no.    123,   May   26,    1911. 
{Lloyd's   Register,    1910-11. 
•'Japan  Year  Book,  1911. 


CHAPTER   XII 
SOUTH   AMERICA 

BRAZIL  gives  subventions  from  the  Federal  treasury 
to   several   foreign   steamship   companies,   and   some 
of  the   States  of  the   federation  also  make   similar 
grants    from   their   treasuries.     Besides   the   subventions   to 
lines  to  foreign  ports,  the  Government  grants  State  aid  to  a 
considerable  number  of  coast  lines  operating  between  Rio 
de  Janeiro  and  other  Brazilian  ports.    The  total  amount 
of  the  subventions  in  1910  was  equal  to  $1,437,880.*    The 
principal  beneficiary  was  the  Lloyd  Brazileiro,  maintaining 
the  line  between  Brazilian  ports  and  the  United  States. 

Argentina  is  adopting  a  policy  of  giving  subsidies  to 
foreign  steamship  companies  which  extend  her  communica- 
tions with  foreign  ports.  As  far  back  as  1865  a  decree 
was  issued  offering  a  subsidy  of  twenty  thousand  dollars  a 
year  for  a  line  between  Argentina  and  the  United  States. 
But  it  was  not  taken.  In  1911  the  Government  was  pre- 
pared to  pay  a  subsidy  to  a  new  steamship  company  pro- 
moted to  furnish  a  regular  service  to  South  Africa.f  In 
1911  there  appeared  the  first  steam  vessel  flying  the  Ameri- 
can flag  at  Buenos  Aires  in  twenty  years.J 

Chile  grants  mail  subsidies,  which  have  no  appreciable 
effect  in  the  merchant  marine.** 


*Con.    Gen.    George    E.    Anderson,    Rio    de    Janeiro,    in    Daily    Con. 
Repts.,  no.    55,  p.   719,  Sept.   7,   1910. 
tDaily  Con.   Repts.,   March  18,   1911. 
jSame,   January   20,    1911. 
••Meeker. 


88 


CHAPTER   XIII 
THE  UNITED  STATES 

WHILE  a  navigation  code  founded  in  1790  and 
1792,  and  developed  in  1816,  1817,  and  1820,  after 
the  model  of  the  then  existing  English  code,*  has 
been  retained  in  modified  form  through  enactments  in 
subsequent  years,  a  system  of  general  ship-subsidies, 
though  repeatedly  proposed,  has  never  been  adopted  by  the 
United  States.  From  1793  to  1866  bounties  were  given  to 
fishing  vessels  and  men  employed  in  the  bank  and  other 
deep-sea  fisheries,!  but  no  subsidies  to  the  merchant  marine 
were  granted  till  1845,  and  these  were  only  postal  sub- 
sidies—  payments  in  excess  of  an  equivalent  for  services  to 
be  rendered  in  ocean  mail-carriage.  The  law  enacted  that 
year  had  for  its  declared  purpose  the  encouragement  of 
American  ocean  steamship-building  and  running.  With  this 
act,  therefore,  the  real  history  of  Government  aid  to 
domestic  shipping  in  this  country  begins. 

At  the  time  of  the  adoption  of  this  policy  America  was 
still  leading  the  world  in  ocean  sailing-ships  with  her 
splendid  fleets  of  fast-sailing  packets  and  "  clippers,"  while 
England  had  taken  the  lead  in  steamships.  The  law  of 
1845  was  the  culmination  of  a  move  begun  in  Congress  in 
1841,  the  year  after  the  first  Cunarder  had  crossed  from 
Liverpool  to  Halifax  and  Boston.  Its  aim  was  to  parry 
England's  bold  stroke  for  maritime  supremacy  with  her 
State-aided  steamship  lines,  and  directly  to  "  protect  our 
merchant  shipping  from  this  new  and  strange  menace.''^ 
The  first  move  of  1841  was  for  an  appropriation  of  a 
million  dollars  annually  for  foreign-mails  carriage  in 
American-owned  ships.J 

*Wells,  chaps.  4  and  5,  pp.  58-94.  Also  Kept,  of  commissioner 
of  navigation  for  1909. 

fU.  S.  Statutes  at  Large.  Also  Kept,  of  commission  of  navigation, 
1909. 

tMarvin,    pp.    240-241. 


70  MANUAL   OF    SHIP   SUBSIDIES 

The  law  of  1845  (March  3)  authorized  the  postmaster- 
general  to  contract  with  American  ship-owners  exclusively 
for  this  service  to  be  performed  in  American  vessels,  steam- 
ships preferred,  and  by  American  citizens,  for  a  period  of 
from  four  to  ten  years,  with  the  proviso  that  Congress  by 
joint  resolve  might  at  any  time  terminate  a  contract.  The 
subsidy  was  embodied  in  the  rates  of  postage  thus  fixed: 
upon  all  letters  and  packets  not  exceeding  a  half-ounce 
in  weight,  between  any  ports  of  the  United  States  and  any 
foreign  ports  not  less  than  three  thousand  miles  distant, 
twenty- four  cents,  with  the  inland  postage  added;  upon 
letters  and  packets  over  one  half-ounce  in  weight,  and  not 
exceeding  one  ounce,  forty-eight  cents,  and  for  every 
additional  half-ounce  or  fraction  of  an  ounce,  fifteen  cents; 
to  any  of  the  West  India  Islands,  or  islands  in  the  Gulf  of 
Mexico,  ten  cents,  twenty  cents,  and  five  cents,  respectively; 
upon  each  newspaper,  pamphlet,  and  price-current  to  any 
of  the  ports  and  places  above  enumerated,  three  cents: 
inland  postage  to  be  added  in  all  cases.  The  postmaster- 
general  was  to  give  the  preference  to  such  bidder  as  should 
propose  to  carry  the  mails  in  a  steamship  rather  than  a 
sailing-ship.  Contractors  were  to  turn  their  ships  over  to 
the  Government  upon  demand  for  conversion  into  ships  of 
war,  the  Government  to  pay  therefor  the  fair  full  value, 
as  ascertained  by  appraisers.  The  postmaster-general  was 
further  authorized  to  make  ten-years'  contracts  for  mail 
carriage  from  place  to  place  in  the  United  States  in  steam- 
boats by  sea,  or  on  the  Gulf  of  Mexico,  or  on  the  Mississippi 
River  up  to  New  Orleans,  on  the  same  conditions  regarding 
the  transfer  of  the  ships  to  the  Government  when  required 
for  use  as  war  ships.* 

The  next  year,  1846,  in  the  annual  post-office  appropria- 
tions act  (June  19),  provision  was  made  for  the  applica- 
tion of  twenty-five  thousand  dollars  toward  the  establish- 
ment of  a  line  of  mail  steamers  between  the  United  States 
and  Bremen;  and  early  in  1847  (February  3)  a  contract 
was  duly  concluded  for  a  Bremen  and  Havre  service,  the 
first  under  the  law  of  1845. 


•U.   S.   Statutes  at  Large,  vol.    V,  p.    748. 


MANUAL   OF    SHIP   SUBSIDIES  71 

This  was  a  five  years'  contract  entered  into  with  the 
Ocean  Steam  Navigation  Company,  upon  the  basis  of  an 
earlier  agreement  (February  1846)  with  Edward  Mills  of 
New  York,  which  Mr.  Mills  had  transferred  to  the  new 
organization.  The  subsidy  was  fixed  at  one  hundred  thou- 
sand dollars  a  year  for  each  ship  going  by  Cowes  to  Bremen 
and  back  to  New  York  once  in  two  months  a  year,  and 
seventy-five  thousand  dollars  a  year  for  each  ship  going 
by  Cowes  to  Havre  and  back  to  New  York.  The  contractors 
were  to  build  within  a  year's  time  four  first-class  steamships 
of  not  less  than  1400  tons,  nor  less  than  a  thousand  horse- 
power; and  were  to  run  their  line  "with  greater  speed  to 
the  distance  than  is  performed  by  the  Cunard  Line  between 
Boston  and  Liverpool  and  back."*  Provision  for  the  sub- 
sidy thus  called  for  was  promptly  made  in  this  item  in  the 
post-office  appropriation  bill  for  the  ensuing  year,  approved 
March  2 :  "  for  transportation  by  steam-ships  between  New 
York  and  Bremen  according  to  the  contract  with  Edward 
Mills,  $258,609."t 

The  next  step  was  the  enactment  of  a  law  which  had  for 
its  declared  ob j  ects  "  to  provide  efficient  mail  services,  to 
encourage  navigation  and  commerce,  and  to  build  up  a 
powerful  fleet  in  case  of  war."J  This  measure,  approved 
March  3,  1847,  entitled  "  An  act  to  provide  for  the  building 
and  equipment  of  four  naval  steamships,"  made  provision 
for  the  construction,  with  Government  aid,  of  merchant 
mail-steamships  under  the  supervision  of  the  Navy  Depart- 
ment that  they  might  be  rendered  suitable  if  needed  for 
war  service. 

The  act  directed  the  secretary  of  the  navy  to  accept  on 
the  part  of  the  Government  certain  proposals  that  had  been 
made  for  the  carriage  of  the  United  States  mails  to  foreign 
ports  in  American-built  and  American-owned  steamships. 
These"  proposals  had  been  submitted  to  the  postmaster- 
general  (March  6,  1846)  by  Edward  K.  Collins  and  asso- 
ciates (James  Brown  and  Stewart  Brown)  of  New  York, 
and  A.  G.  Sloo  of  Cincinnati:  one  for  mail  transportation 

*This  contract  in  Executive  Document,  30th  Cong.,  1st  seas,  no.   50. 

tU.   S.   Statutes  at  Large,   vol.    IX,   p.   152. 

iMeeker. 


73  MANUAL   OF    SHIP   SUBSIDIES 

by  steamship  between  New  York  and  Liverpool,  semi- 
monthly, the  other  between  New  York  and  New  Orleans, 
Havana,  and  Chagres,  twice  a  month.  The  secretary  was 
directed  to  contract  with  Messrs.  Collins  and  Sloo  in  accord- 
ance with  the  provisions  laid  down  in  this  act.  These 
required  that  the  steamers  be  built  under  the  inspection 
of  naval  constructors  and  be  acceptable  to  the  Navy 
Department;  that  each  ship  carry  four  passed  midshipmen 
of  the  navy  to  serve  as  watch-officers,  and  a  mail  agent 
approved  by  the  postmaster-general.  Mr.  Sloo's  ships  for 
his  West  India  service  were  to  be  commanded  by  officers 
of  the  navy  not  below  the  grade  of  lieutenant.  The  secre- 
tary was  further  directed  to  contract  for  mail-carriage 
beyond  the  Isthmus,  —  from  Panama  up  the  Pacific  coast  to 
some  point  in  the  Territory  of  Oregon,  once  a  month  each 
way;  but  this  service  could  be  performed  in  either  steam  or 
sailing  ships,  as  should  be  deemed  more  expedient.* 

All  the  contracts  thus  provided  for  were  concluded  the 
same  year.  Each  was  to  run  for  ten  years.  The  first 
executed  was  that  with  Mr.  Sloo.  It  called  for  five  steam- 
ships of  not  less  than  1500  tons,  and  a  semi-monthly  service. 
The  line  was  to  touch  at  Charleston,  if  practicable,  and  at 
Savannah.  The  ships  were  to  have  engines  by  direct  action; 
and  each  ship  was  to  be  sheathed  with  copper.  The  subsidy 
was  fixed  at  two  hundred  and  ninety  thousand  dollars  a 
year,  a  rate  of  $1.83!/2  per  mile,  the  distance  to  be  sailed 
out  and  back  being  158,000  miles.f  Mr.  Sloo  immediately 
set  over  his  contract  to  George  Law,  Marshall  O.  Roberts, 
and  Bowes  Mcllvaine,  of  New  York.$  The  second  contract 
was  for  the  Pacific  service,  connecting  with  the  mail  by  the 
Sloo  line  across  the  Isthmus.  This  was  made  with  Arnold 
Harris  of  Arkansas.  It  provided  for  a  monthly  service 
between  Panama  and  Astoria,  Oregon,  calling  at  San 
Diego,  Monterey,  and  San  Francisco,  with  a  subsidy  of  one 
hundred  and  ninety-nine  thousand  dollars  per  annum.  Three 
steamers  were  to  be  furnished,  two  of  not  less  than  a 
thousand  tons  each.  Upon  receiving  the  contract  Mr. 

"U.  S.  Statutes  at  Large,  vol.   IX,  p.  187. 

tMeeker. 

JFor  the  Sloo  contract  see  Exec.  Docs.,  32nd  Cong:..  1st  sess.,  no.  Cl 


MANUAL   OF   SHIP   SUBSIDIES  73 

Harris  immediately  transferred  it  to  W.  H.  Aspinwall  of 
New  York,  representing  the  newly  formed  Pacific  Mail 
Steamship  Company.*  The  third  was  the  Collins  contract. 
This  stipulated  for  a  semi-monthly  service  between  New 
York  and  Liverpool  during  the  eight  open  months  of  the 
year,  and  a  monthly  service  through  the  four  winter 
months,  with  five  steamers,  each  of  not  less  than  2000  tons 
and  engines  of  a  thousand  horsepower.  The  first  ship  was 
to  be  ready  for  service  in  eighteen  months  after  the  date 
of  the  contract,  November  1,  1847.  The  subsidy  was  fixed 
at  $19,250  per  twenty  round  trips,  or  three  hundred  and 
eighty-five  thousand  dollars  a  year,  a  rate  of  $3.11  a  mile 
for  sailing  about  124,000  miles.f 

By  subsequent  acts  the  secretary  of  the  navy  was 
authorized  to  advance  twenty-five  thousand  dollars  a  month 
on  each  of  the  ships  called  for  by  these  several  contracts 
from  the  time  of  their  launching  to  their  finish;  and  the 
date  of  the  completion  of  the  first  Collins  steamer  and  the 
opening  of  the  New  York  and  Liverpool  service  was 
extended  to  June  1,  1850.J 

At  the  same  time  that  the  secretary  of  the  navy  was 
executing  these  contracts  the  postmaster-general  under  the 
authority  of  an  act  "  to  establish  certain  Post  Routes  and 
for  other  purposes,"  also  approved  March  3,  1847,**  was 
contracting  for  a  steamship  mail-service  between  Charleston 
and  Havana,  with  a  subsidy  of  forty-five  thousand  dollars  per 
annum.  This  contract  was  entered  into  with  M.  C.  Mordecai 
of  Charleston,  who  agreed  to  furnish  steamships  suitable 
for  war  purposes,  and  to  perform  a  monthly  service.ff 
Several  other  propositions  for  steamship  service  to  various 
foreign  countries  were  made  to  the  postmaster-general  at 
this  time,  but  none  was  accepted.^! 

The  pioneer  Bremen-Havre  line  began  its  service  on  the 
first  day  of  June  1847,  with  two  steamers.  These  were  the 

•For  this  contract  see  Exec.   Docs.,   32nd  Cong.,   1st  sess.,  no.   91. 
fMeeker.      This  contract   in  Exec.    Docs.,   32nd   Cong.,    1st   sess.,   no. 
91,   pp.    71-74. 

JNavy   appropriation   bills,    Aug.    3,    1848,    March   3,    1849. 
**U.    S.    Statutes  at   Large,  vol.   IX,   p.   188. 
ttExec.  Docs.,  30th  Cong.,  1st  sess.,  no.  51. 

Docs.,    30th   Cong.,    1st   sess.,    no.    51. 


74  MANUAL   OF   SHIP   SUBSIDIES 

Washington  and  the  Hermann,  built  in  New  York,  strong 
and  large,  of  1640  tons  and  1734  tons,  respectively,  side- 
wheelers,  bark-rigged.  At  first  they  made  the  run  to 
Bremen  in  from  twelve  to  seventeen  days,  much  better 
time  than  the  average  clipper.*  But  up  to  1851  they  had 
no  regular  schedule  of  sailings,  and,  their  speed  being  un- 
satisfactory, few  mails  were  sent  by  them.  The  subsidy  pay- 
ments, therefore,  were  made  for  each  voyage  separately.t 
They  had  also  ceased  to  command  the  patronage  of 
travellers.  Nevertheless,  as  a  committee  of  the  Senate  in 
1850  reported,  they  were  believed  to  have  been  "  profitable 
to  their  owners  as  freight  vessels,  and  of  essential  service 
in  promoting  the  interests  of  American  commerce.''^  The 
full  service,  with  twelve  trips  to  Bremen  and  twelve  to 
Havre,  was  finally  begun  in  1851,  when  two  more,  and 
larger  ships,  —  the  Franklin  and  the  Humboldt,  each  of 
2184  tons,  were  added  to  the  Havre  line.  Four  years  before, 
the  original  company,  because  of  financial  difficulties,  had 
organized  a  separate  corporation  for  the  Havre  service.  In 
1852  Congress  extended  the  contract  to  1857 ;f  and  South- 
ampton was  made  the  point  of  shifting  the  mails. 

The  New  York  and  Chagres,  the  Charleston  and  Havana, 
and  the  Pacific  line,  were  all  under  way  before  the  close 
of  1848.  The  Pacific  line  was  the  first  in  operation.  The 
service  began  with  the  three  steamers  called  for  by  the 
contract,  the  first  sailing  from  New  York  on  the  sixth  of 
October,  the  other  two  early  in  December.  They  were  the 
California,  1050  tons,  the  Panama,  1087  tons,  the  Oregon, 
1099  tons,  all  built  in  New  York.  The  New  York  and 
Chagres  line  was  started  also  in  December  with  the  sailing 
of  the  Falcon,  1000  tons,  a  purchased  steamer  which  the 
Navy  Department  accepted  temporarily,  while  the  new 
ships  were  building,  that  the  service  might  be  immediately 
begun.  The  opening  of  the  new  territory  south  of  Oregon 
acquired  through  the  Mexican  War,  and  the  beginning  of  the 
rush  of  the  "  Argonauts "  to  the  newly  discovered  gold 

•Marvin,   p.    243. 
tMeeker. 

JReport  in  the  Senate  Sept.   18,   1850,   in  Exec.   Docs.,   32nd  Cong., 
1st  sess.,  no.   91,  pp.  11-15. 


MANUAL   OF   SHIP   SUBSIDIES  75 

fields  of  California,  had  made  all  concerned  anxious  to  get 
these  connecting  steamship  lines  a-going. 

At  first  the  service  was  halting  because  of  unavoidable 
circumstances.  The  Pacific  Company  were  unable  at  once 
to  meet  the  demands.  Sufficient  or  competent  crews  could 
not  be  obtained  on  the  California  coast  during  the  gold 
excitement,*  at  fever  heat  in  1849.  But  it  was  not  long 
before  more  ships  were  put  on,  and  the  service  improved 
and  prospered.  By  September,  1849,  the  Chagres  company 
had  their  first  completed  ship  in  commission.  This  was  the 
Ohio,  2432  tons,  built  in  New  York.  By  June,  1850,  the 
second,  the  Georgia  (and  the  third  of  the  line,  for 
the  Falcon  was  retained)  was  running.  Soon  afterwards  the 
Illinois  was  added.  At  about  the  same  time  the  Pacific 
company  had  added  two  more  to  their  fleet  —  the  Columbia 
and  the  Tennessee.  In  1851  the  postmaster-general  was 
authorized  to  increase  the  Pacific  trips  to  semi-monthly;  and 
the  subsidy  was  increased.  An  additional  contract  (March 
13)  was  then  made  with  Mr.  Aspinwall,  as  president  of  the 
Pacific  MaiLf  This  called  for  the  enlargement  of  the  line 
within  a  year,  to  six  steamers;  and  for  semi-monthly  trips 
from  Panama  to  Oregon  and  back,  with  stops  and  mail 
delivery  at  named  points  in  California;  and  increased  the 
company's  subsidy  by  one  hundred  and  forty-nine  thousand 
two  hundred  and  fifty  dollars  per  annum.  Thus  the  yearly 
total  became  three  hundred  and  forty-eight  thousand  two 
hundred  and  fifty  dollars.  Before  the  semi-monthly  trips 
were  begun,  San  Diego  and  Monterey  were  dropped  for  the 
regular  service,  to  be  served  by  a  slower  line.:}:  Also  this 
year  (1851)  two  more  steamers  were  added  to  the  fleet. 

By  this  time  on  the  Atlantic  side  the  Collins  Line  was 
in  promising  operation.  The  service  had  auspiciously  begun 
in  1850  with  four  of  the  five  steamships  called  for  by  the 
contract.  These  were  the  Atlantic,  2845  tons,  the  Arctic, 
2856  tons,  the  Baltic,  2723  tons,  and  the  Pacific,  2707  tons, 
each  some  seven  hundred  tons  larger  than  the  measurement 

*  Meeker. 

tFor   contract   see  Exec.    Docs.,   32nd   Cong.,    1st    sess.,    no.    91,    pp. 
154-157. 

JExec.    Docs.,    32nd   Cong.,    1st   sess.,    no.    91,   pp.    5-7. 


76  MANUAL   OF    SHIP   SUBSIDIES 

stipulated  —  "at  least  2000  tons."  All  were  built  in  New 
York  ship-yards;  were  especially  designed  for  fast  sailing; 
and  in  size,  model,  finish,  and  fittings  were  pronounced  to 
be  "  such  steamers  as  the  world  had  never  seen."*  In  all 
respects  they  were  superior  to  the  Cunarders  with  which 
they  were  aggressively  to  compete;  and  it  was  the  boast 
of  the  Americans  that  they  would  "  beat  the  English  in 
steam  navigation,  as  they  had  beaten  them  in  fast  sailing." 
All  associated  with  the  enterprise  were  of  large  experience 
in  maritime  affairs.  Mr.  Collins,  a  native  of  Truro,  Cape 
Cod,  and  long  a  shipping  merchant  of  New  York,  had 
been  at  the  head  of  fast  clipper-ship  lines  —  the  New 
Orleans  and  Vera  Cruz  packet  line,  and  the  more  famous 
"  Dramatic  line  "  (the  ships  named  for  plays  and  players) 
of  transatlantic  sailers.  The  commanders  of  the  steamers 
were  all  tried  clipper  captains. 

The  Atlantic  made  the  initial  voyage,  steaming  gallantly 
out  of  New  York  harbor  on  the  twenty-seventh  of  April,  a 
month  before  the  contract  time  for  the  beginning  of  the 
service.  The  Pacific  followed  in  June,  the  Baltic  in  Novem- 
ber, the  Arctic  in  December.  They  beat  the  Cunarders'  time 
on  the  average  by  a  day.  Their  popularity  was  immediately 
established.  Their  passenger  traffic  rapidly  increased.  But 
the  severe  condition  of  the  mail  contract,  with  their  quick 
sailings  allowing  only  short  stays  in  port,  made  it  impossible 
for  the  company  to  secure  a  profitable  share  of  the  freight 
business  without  a  heavy  outlay  for  slower  cargo  boats. 
Within  a  few  months  after  the  start  of  the  line  the  Cunard 
Company  had  cut  freight  rates  from  seven  pounds  ten 
shillings  per  ton  to  four  pounds.  So,  while  the  Collins  ships 
continued  steadily  to  outsail  the  Cunarders  and  got  the 
bulk  of  the  passenger  traffic,  the  Cunarders  got  most  of  the 
freighting.  Moreover,  the  Collins  ships  were  far  more  ex- 
pensive to  run.  Indeed,  the  cost  of  the  rapid  service  was 
enormous.  Mr.  Collins  stated  before  a  committee  of  Con- 


•Marvin,  p.  247.  The  measurement  of  these  steamers  is  differently 
given  by  Spears:  p.  26.  "When  done,  the  ships  were  found  to  have 
fine  models — they  rode  the  waves  in  a  way  that  excited  the  admira- 
tion of  all  sailors.  But  the  keelsons  under  the  engines  were  only  40 
inches  deep,  while  the  keels  were  277  ft.  long,  and  there  was  'give 
enough  to  rack  the  engines  to  pieces."  Spears,  p.  267. 


MANUAL   OF   SHIP   SUBSIDIES  77 

gress  that  to  save  a  day  or  a  day  and  a  half  in  the  run 
between  New  York  and  Liverpool  cost  the  company  nearly  a 
million  dollars  annually. 

Accordingly  more  subsidy  was  asked  for.  This  was 
granted  in  1852,  the  act  being  stimulated  by  England's 
move  late  in  1851  in  raising  the  Cunards'  subsidy  to  £173,34,0 
($843,000),  for  forty-four  trips  a  year:  about  nineteen 
thousand  dollars  per  voyage.  The  extra  allowance  lifted 
the  Collins  subsidy  to  $853,000  for  twenty-six  trips  a  year, 
thirty-three  thousand  dollars  per  voyage,  a  rate  of  upward 
of  five  dollars  a  mile.* 

The  competition  now  became  sharper.  Still  the  Collins 
Line  maintained  its  record  sailings,  and  continued  to  beat 
the  English.  Then  it  was  sharply  checked  by  a  grave 
disaster.  On  the  twenty-fourth  of  September,  1854,  the 
Arctic,  when  forty  miles  off  Cape  Race,  rushing  through  a 
fog,  was  rammed  by  a  French  steamer,  and  sunk  with  three 
hundred  and  seven  souls.  This  calamity  had  a  depressing 
effect  on  the  company's  affairs.  Two  years  later,  in  1856, 
Congress  determined  to  reduce  the  subsidy,  and  notice  of 
the  discontinuance  of  the  extra  allowance  of  1852  was 
ordered.f  Only  a  few  weeks  after  this  action  another 
disaster,  even  more  appalling  than  the  first  one,  befell  the 
company.  On  September  23  the  Pacific  sailed  from  Liver- 
pool for  her  homeward  voyage  with  a  full  complement  of 
passengers;  passed  to  sea  out  of  sight;  and  was  never 
more  heard  of.  She  was  replaced  by  the  Adriatic,  the 
fifth  ship  called  for  by  the  contract,  which  was  launched  the 
year  before,  the  largest,  finest,  swiftest,  and  most  luxuriou/5 
then  afloat;  and  the  company  struggled  on  against  accumu- 
lating odds. 

At  length,  in  1858,  Congress  abandoned  the  subsidy 
system  and  returned  to  the  method  of  payment  for  foreign 
mail-carriage  according  to  the  actual  service  rendered,  with 
a  proviso,  however,  favoring  American  ships,  such  to  receive 
the  inland-postage  plus  the  sea  postage,  while  foreign  ships 
were  to  have  the  sea  postage  only.t 

•Meeker. 

tU.   S.   Statutes   at  Large,   vol.    XI,   p.    101  ;    chap.   CLXI,    Aug.    18, 
1856. 

tSame  appropriation  act  for  ocean  steamship  service,  June  14,  1858. 


78  MANUAL   OF   SHIP   SUBSIDIES 

This  was  the  final  blow.  The  last  voyage  of  the  Collins 
Line  was  made  in  January,  1859.  Then  it  perished.  In 
April  following,  the  ships  were  seized  by  the  mortgagees 
and  sold.  So  closed  the  career  of  the  pioneer  United  States 
ship  company  in  the  transatlantic  service.  The  splendid 
Adriatic  passed  to  English  ownership  and  the  American 
flag  gave  way  to  the  British.  For  several  years  this  ship 
"  held  the  transatlantic  record  with  a  passage  of  five  days 
nineteen  hours  from  Galway  to  St.  John's."* 

Of  the  other  subsidized  lines,  the  ships  of  the  Bremen 
service  were  withdrawn  and  laid  up  after  the  subsidy 
ceased.  The  Havre  line  continued  a  while  longer  with 
two  ships  that  had  replaced  the  Humboldt  and  the  Franklin, 
both  of  which  had  been  lost,  —  the  Humboldt  wrecked  at 
Halifax  on  December  5,  1853;  the  Franklin  stranded  on 
Montauk  Point  on  July  17,  1854.  Then  with  the  charter 
of  the  two  new  steamers  by  the  Government  in  1861  for 
use  in  the  Civil  War,  the  Havre  line  also  disappeared. 

The  cost  to  the  Government  of  this  first  steamship 
subsidy  venture,  covering  the  thirteen  years  between  1845 
and  1858,  was  approximately  fourteen  and  a  half  million 
dollars.f 

Meanwhile,  within  this  period,  the  American  wooden 
sailing-ships  continued  to  be  the  glory  of  the  seas,  and  the 
American  clippers  reached  their  highest  development.  The 
appearance  of  steamships  on  the  North  Atlantic  and  the 
Pacific  had  inspired  the  producers  of  the  "  wonderful  Ameri- 
can sailing-ships"  to  greater  efforts  for  their  perfection; 
and  the  clipper,  surpassing  all  other  types  of  sailers  in  size, 
sea-qualities,  and  speed,  was  the  result  of  the  intensified 
rivalry  of  canvas  and  steam.J  The  American  clipper-ship 
era  fairly  opened  with  the  advent  of  the  Collins  Steamship 
Line.**  Between  1850  and  1855  clipper-ships  were  built  for 
nearly  every  trade,tt  and  they  were  on  every  sea.  Some 

*Marvin,   p.   279. 

tMeeker  gives  the  details  as  follows:  Bremen  line  (1847-57) 
$2,000,000;  Havre  line  (1852-57)  $750,000;  Collins  line  (1850-58) 
$4,500,000;  New  York  to  Aspinwall  (1848-58)  $2,900,000;  Astoria 
and  San  Francisco  to  Panama  (1848-58)  $3,750,000 ;  Charleston  to 
Havana  (1848-58)  $500,000. 

JMarvin,   p.    253. 

••Bates,  p.  133. 

ttSame,  p.   143. 


MANUAL   OF   SHIP   SUBSIDIES  79 

of  the  first  were  employed  in  the  transatlantic  packet 
service.  More  became  engaged  particularly  in  the  "  boom- 
ing "  trade  to  California,  in  the  long-voyage  traffic  to  China 
and  India.*  "  When  John  Bull  came  floating  into  San 
Francisco,  or  Sydney,  or  Melbourne,  he  used  to  find  Uncle 
Sam  sitting  carelessly,  with  his  legs  dangling  over  the  wharf, 
smoking  his  pipe,  with  his  cargo  sold  and  his  pockets  full 
of  money.f  The  Crimean  War,  1853-56,  opened  a  new 
and  prosperous  market  for  American  fast  sailing-ships,  as 
transports.  To  meet  the  demand  American  ship-yards  pro- 
duced in  1855  more  tonnage  than  they  had  ever  built 
before.^:  The  sailing-ship  interests  strenuously  opposed 
the  subsidy  system.  They  denounced  it  as  class  legislation 
unjustly  favoring  the  few,  and  urged  its  abolishment.** 
How  strong  this  influence  was  in  bringing  about  the  change 
in  policy  is  a  mooted  question. 

No  further  move  for  fostering  the  American  merchant 
marine  with  State  aid  directly  or  indirectjy,  was  made  till 
1864.  Then  the  steamship-subsidizing  policy  was  revived, 
first  with  a  proposition  for  the  establishment  of  an  American 
mail-line  to  Brazil.  A  subsidy  of  two  hundred  and  fifty 
thousand  dollars  per  year  was  proposed,  one  hundred  and 
fifty  thousand  to  be  paid  by  the  United  States  and  one 
hundred  thousand  by  the  Brazilian  Government.  Congress 
endorsed  the  scheme.  The  act  embodying  it  (May  28) ft 
authorized  the  postmaster-general  to  contract  for  a  monthly 
service  between  the  two  countries,  touching  at  St.  Thomas, 
W.  I.,  by  first-class  American  sea-going  steamships  of  not 
less  than  2000  tons.  The  steamers  were  to  be  built  under 
naval  inspection,  and  to  be  subject  to  taking  for  war 
service.  Bids  were  to  be  openly  advertised  for.  The  con- 
tract was  to  run  for  ten  years.  Thus  was  established  the 
pioneer  American  line  between  Philadelphia  and  Rio  de 
Janeiro,  which  continued  from  1865  to  1876,  and  was  then 
abandoned. 


•Marvin,    p.    254. 

tGeorge    Frisbie    Hoar. 

JMarvin,    p.    258. 

"Bates,    p.    142. 

ttUniterf   States  Statutes   at   Large,   vol.    XIII,   p.    93. 


80  MANUAL   OF   SHIP   SUBSIDIES 

In  the  same  session  of  Congress  a  bill  was  introduced, 
authorizing  an  annual  subsidy  of  five  hundred  thousand 
dollars  for  an  ocean  mail-steamship  service  to  Japan  and 
China  via  Hawaii.  This  also  received  favorable  considera- 
tion, and  was  passed  February  17,  1865.  The  service  was 
to  be  monthly,  performed  by  American-built  ships  of  not 
less  than  3000  tons,  also  constructed  under  naval  inspection. 
Tenders  for  the  contract  were  to  be  advertised  for,  but  bids 
only  from  United  States  citizens  were  to  be  entertained. 
The  contract  was  to  run  for  ten  years.  Only  one  bidder 
appeared  (as  was  evidently  expected) — the  Pacific  Mail 
Steamship  Company.  The  contract  went  to  that  company, 
and  under  it,  in  1867,  their  prosperous  Asiatic  service  began. 
At  the  outset  they  were  released  from  the  obligation  of 
stopping  at  Hawaii,  and  Congress  voted  another  subsidy  — 
seventy  five  thousand  dollars  per  annum  —  for  a  distinct 
Hawaiian  service.*  The  contract  for  this  service,  also  adver- 
tised for,  went  to  the  California,  Oregon,  and  Mexican  Line. 

Thus  far  the  granting  of  postal  subsidies  for  the  estab- 
lishment of  steamship  lines  alone  had  engaged  the  advocates 
of  State  aid  to  American  shipping.  Now  was  agitated  the 
institution  of  a  general  subsidy  system  as  a  means  of  foster- 
ing the  rehabilitation  of  the  merchant  marine  of  all  classes 
in  ocean  service,  sailing-ships  as  well  as  steamers.  The 
situation  had  become  acute.  Through  the  great  loss  of 
tonnage  in  the  Civil  War,  and  through  the  steadily  advanc- 
ing change  from  wood  to  iron  in  ship  construction  and  from 
sail  to  steam  propulsion,  the  American  merchant  marine 
had  been  brought  distressingly  low.  From  1861,  when  the 
United  States  was  standing  second  in  rank  among  the 
nations  in  the  extent  of  her  ocean  tonnage,  to  1866,  this 
tonnage  had  declined  from  2,642,648  to  1,492,926  tons:  a 
loss  of  more  than  forty-three  per  cent;  while  England,  the 
first  in  rank  and  chief  competitor,  had  in  the  same  period 
gained  986,715  tons,  or  more  than  forty  per  cent.  More- 
over, of  this  increase  in  English  tonnage,  a  large  percentage 
had  been  in  steamers,  one  ton  of  which  class  was  estimated 

•Session  of  1866-67. 


MANUAL  OF  SHIP   SUBSIDIES  81 

to  be  equal  in  efficiency  to  three  tons  of  sailing-ships;  while, 
by  substituting  largely  iron  for  wood,  England  had  gained  a 
still  further  advantage  in  her  much  larger  class  of  iron 
vessels,  doubly  as  durable  as  those  of  wood.* 

The  matter  was  brought  up  in  Congress  by  a  resolution 
of  the  House,  March  22,  1869,  calling  for  the  appointment 
of  a  select  committee,  "  to  inquire  into  and  report  at  the 
next  session  of  Congress  the  causes  of  the  great  reduction 
of  American  tonnage  engaged  in  the  foreign  carrying  trade, 
and  the  great  depression  of  the  navigation  interests  of  the 
country;  and  also  to  report  what  measures  are  necessary  to 
increase  our  ocean  tonnage,  revive  our  navigation  interests, 
and  regain  for  our  country  the  position  it  once  had  among 
the  nations  as  a  great  maritime  power."  Of  this  committee 
Representative  John  Lynch  of  Maine  was  made  chairman. 

The  committee  gave  a  series  of  hearings  mainly  in 
Atlantic  seaboard  cities,  and  submitted  their  report  on 
February  17,  1870,  accompanied  by  two  bills  recommended 
for  passage;  the  one,  a  bounty  bill,  the  other,  relative  to 
tonnage  duties.  With  these  measures  the  history  of  years 
of  effort  to  establish  the  principle  of  general  ship-subsidies 
in  the  American  economic  system  properly  begins. 

The  Lynch  bounty  bill,  entitled  "  An  act  to  revive  the 
navigation  and  commercial  interests  of  the  United  States," 
made  provision  for  the  remission  of  duties  upon  the  raw 
materials  entering  into  the  construction  of  sailing  and 
steam-ships;  for  the  taking  in  bond,  free  of  duty,  of  all 
stores  used  in  vessels  in  sailing  to  foreign  ports;  and  for 
bounties,  or  subsidies,  to  American  sailing  and  steam-ships 
engaged  in  foreign  commerce,  already  built  as  well  as  to 
be  built:  the  aid  being  extended  to  those  already  built 
because  they  had  been  sailed  during  the  Civil  War  and 
since  "at  great  disadvantage."*  The  amount  of  duties  to 
be  remitted  was  to  be  equal  to  the  amount  per  ton  collected 
on  the  materials  required  for  certain  defined  classes  of 
ships:  on  wooden  vessels,  eight  dollars  a  ton;  on  iron,  twelve 
dollars  a  ton;  on  composite  vessels  (vessels  composed  of 

•Report  of  the  select  committee  on  the  merchant  marine,  in  Ecpts. 
of  Committee,  1870;   41st  Cong.,   2d  sess.,  House  Kept.,  no.   28. 
'House  Kept.,   no.   2373,   51st  Cong.,    2nd  sess- 


89  MANUAL   OF   SHIP  SUBSIDIES 

iron  frames  and  wooden  planking),  twelve  dollars  a  ton; 
on  iron  steamers,  fifteen  dollars  a  ton.  Where  American 
materials  were  used  in  the  construction  of  iron  or  com- 
posite vessels,  allowance  was  to  be  made  of  an  amount 
equivalent  to  the  duties  imposed  on  similar  articles  of 
foreign  manufacture.  The  bounties  were  thus  classified: 
to  owners  of  American  registered  ships  engaging  for  more 
than  six  months  in  a  year  in  the  carrying  trade  between 
America  and  foreign  ports,  or  between  ports  of  foreign 
countries,  a  dollar  and  a  half  per  ton  upon  a  sailing-ship 
each  year  so  engaged,  and  a  dollar  and  a  half  upon  a 
steamer  running  to  and  from  the  ports  of  the  British 
North  American  provinces;  four  dollars  upon  a  steamer 
running  to  and  from  any  European  port;  and  three  dollars 
to  and  from  all  other  foreign  ports.* 

The  intent  of  the  second  bill,  "imposing  tonnage  duties 
and  for  other  purposes,"  was  the  readjustment  of  the 
existing  tax  upon  tonnage  so  that  it  should  fall  "more 
equitably  upon  the  different  classes  of  vessels  affected 
thereby."*  It  removed  all  tonnage,  harbor,  pilotage,  and 
other  like  taxes  imposed  upon  shipping  by  State  and 
municipal  authority  (except  wharfage,  pierage,  and  dock- 
age) ;  and  imposed  a  duty  of  thirty  cents  per  ton  on  all 
ships,  vessels,  or  steamers  entered  in  the  United  States. 

The  committee's  measures  were  ably  advocated,  but  they 
finally  went  down  in  defeat. 

In  1872  the  Pacific  Mail  Steamship  Company  came 
forward  with  an  offer  to  add  another  monthly  mail-steamship 
service  to  Japan  and  China,  for  an  additional  subsidy  of 
a  half  million  dollars  a  year.  At  the  same  session  a  project 
to  establish  a  subsidized  line  to  Australia  was  introduced; 
another,  for  a  subsidized  line  from  New  Orleans  to  Cuba. 
These  failed,  while  the  scheme  of  the  Pacific  Mail  won.  A 
bill  authorizing  such  contract  was  enacted  June  1,  that  year, 
after  prolonged  and  warm  debates,  and  by  close  votes  in 
House  and  Senate.  Two  years  afterwards  it  was  discovered 
that  bribery  had  been  employed  in  securing  the  passage 
of  that  act ;  the  charge  being  that  a  million  dollars  had  been 
"House  Report,  no.  28,  41st  Cong:.,  2d  scss. 


MANUAL  OF   SHIP   SUBSIDIES  83 

spent  by  a  corrupt  lobby  in  pushing  the  bill  through.* 
Upon  these  disclosures,  and  because  the  company  had  failed 
to  fulfil  its  conditions,  Congress,  by  act  of  March  3,  1875, 
abrogated  the  contract.t  In  1877  the  first  contract  with  the 
Pacific  Mail  for  the  Japan  and  China  service,  expired. 
During  its  ten  years'  term  the  company  had  received  from 
the  Government  a  total  of  $4,583,333.33.$ 

With  the  Pacific  Mail  exposure  the  word  subsidy  became 
unsavory  to  the  public  taste,  and  for  some  years  after  no 
subsidy  measure,  however  carefully  guarded  or  respectably 
backed,  could  find  favor  in  Congress.  A  second  project 
for  subsidizing  a  new  line  to  Brazil,  proposed  by  John 
Roach,  the  noted  American  shipbuilder,  in  1879,  was  among 
those  ventured,  only  to  fail. 

A  decade  later,  in  1889,  when  conditions  seemed  to  be 
growing  more  propitious,  the  subject  was  revived  with 
vigor  by  the  introduction  of  a  navigation  subsidy  bill  pro- 
posed by  the  American  Shipping  League.**  From  this 
evolved  in  1890  a  tonnage  bounty  bill  reported  in  the  House 
by  Representative  James  M.  Farquhar  of  New  York.ft  The 
final  outcome,  indirectly,  of  these  moves  was  the  reestablish- 
ment  of  the  postal  subsidy  system,  abandoned  in  1858,  in  the 
enactment  March  3,  1891,  of  what  is  known  as  the  Postal 
Aid  Law. 

This  one  ship-subsidy  law  now  on  the  statutes  was  in 
its  original  draft  one  of  two  proposed  measures,  termed 
respectively  the  Mail  Ship  Bill  and  the  Cargo  Ship  Bill, 
both  reported  in  the  Senate  by  Senator  William  P.  Frye  of 
Maine.  The  Cargo  Bill  provided  for  navigation  bounties  to 
sailing-ships  and  steamers.  The  objects  of  these  measures, 
as  stated  by  the  promoters,  were  "  (1)  to  secure  regular 
and  quicker  service  to  countries  now  reached;  (2)  to  make 
new  and  direct  commercial  exchanges  with  countries  not 
now  reached;  (3)  to  develop  new  and  enlarge  old  markets 

•House   Docs.,  no.    598,   also  Miscellaneous  Docs.,   nos.    74   and   255, 
42d    Cong.,    2nd    sees. 

tHouse  Docs.,  no.  268,  43rd  Cong.,  1st  sess. 

JMeeker. 

••House    Docs.,    Kept.,    no.    601,    51st    Cong.,    1st   sess. 

ttText  of   this  bill   in   Bates,   pp.    411-416. 


84  MANUAL   OF   SHIP   SUBSIDIES 

in  the  interest  of  producers  and  consumers  under  the  reci- 
procity treaties  completed  and  under  consideration;  (4)  to 
assist  the  promotion  of  a  powerful  naval  reserve;  (5)  to 
establish  a  training-school  for  American  seamen."* 

Both  bills  passed  the  Senate,  but  the  House  rejected  the 
Cargo  Bill  and  passed  the  Mail  Bill  only  after  amending 
it  essentially.  The  subsidy  rate  was  cut  one-third  on 
steamers  of  the  first  class  —  the  highest  class  of  ocean 
liners,t —  and  was  reduced  on  the  second  class.  The  act 
as  finally  approved  comprises  the  following  features: 

Empowering  the  postmaster-general  to  contract  for  terms 
of  from  five  to  ten  years  with  American  citizens  for  carry- 
ing the  mails  on  American  steamships  between  ports  of  the 
United  States  and  ports  in  foreign  countries,  the  Dominion 
of  Canada  excepted ;  the  service  on  such  lines  "  to  be 
equitably  distributed  among  the  Atlantic,  Mexican  Gulf, 
and  Pacific  ports."  Proposals  to  be  invited  by  public 
advertisement  three  months  before  the  letting  of  a  contract; 
and  the  contract  to  go  to  the  lowest  responsible  bidder. 
The  steamships  employed,  to  be  American-built,  owned 
and  officered  by  American  citizens;  and  the  following  pro- 
portion of  the  crews  American  citizens,  to  wit:  "during  the 
first  two  years  of  each  contract,  one-fourth  thereof;  during 
the  next  three  succeeding  years,  one-third  thereof;  and 
during  the  remaining  time  of  the  continuance  of  such 
contract,  at  least  one-half  thereof."  The  subsidized  steam- 
ships are  ranked  in  four  classes:  in  the  first  class,  iron  or 
steel  screw  steamships,  capable  of  making  a  speed  of  twenty 
knots  an  hour  at  sea  of  ordinary  weather,  and  of  a  gross 
tonnage  of  not  less  than  8,000  tons;  second  class,  iron  or 
steel,  speed  of  sixteen  knots,  5,000  tons;  third  class,  iron 
or  steel,  fourteen  knots,  2,500  tons;  fourth  class,  iron  or 
steel,  or  wooden,  twelve  knots,  1,500  tons.  Only  those  of 
the  first  class  eligible  to  the  contract  service  between  the 
United  States  and  Great  Britain.  All  except  the  fourth 
class  to  be  constructed  under  the  supervision  of  the  Navy 
Department,  with  particular  reference  to  prompt  and 
economical  conversion  into  auxiliary  cruisers,  of  sufficient 

•House   Kept.,   no.    3273,   51st   Cong.,   2d   sees. 
fMarvin,    p.    414. 


MANUAL  OF   SHIP   SUBSIDIES  85 

strength  and  stability  to  carry  and  sustain  at  least  four 
effective  rifled  cannon  of  a  calibre  of  not  less  than  six 
inches;  and  to  be  of  the  highest  rating  known  to  maritime 
commerce. 

The  subsidy,  or  rate  of  compensation,  as  it  is  termed, 
for  mail-carriage  is  thus  fixed  in  each  class:  first  class,  not 
exceeding  four  dollars  (in  the  original  draft  six  dollars)  a 
mile;  second  class,  two  dollars  a  mile,  by  the  shortest 
practicable  route  for  each  outward  voyage;  third  class,  one 
dollar  a  mile;  fourth  class,  two-thirds  of  a  dollar  a  mile 
for  the  actual  number  of  miles  required  by  the  Post  Office 
Department  to  be  travelled  on  each  outward  bound  voyage. 
Pro  rata  deductions  from  the  compensations,  and  penalties, 
are  imposed  for  omission  of  a  voyage  or  voyages,  and  for 
delays  or  irregularities  in  service.  No  steamship  in  the 
contract  service  is  to  receive  any  other  bounty  or  subsidy 
from  the  national  treasury.  Sanction  is  given  to  naval 
officers  to  volunteer  for  service  on  the  contract  mail  steam- 
ships; and,  while  so  employed,  they  are  to  receive  furlough 
pay  in  addition  to  their  steamship  pay,  provided  they  are 
required  to  perform  such  duties  as  appertain  to  the  mer- 
chant service.  The  training-school  for  seamen  is  established 
by  a  provision  requiring  that  the  contract  steamers  "shall 
take  cadets  or  apprentices,  one  American-born  boy  for  each 
thousand  tons  gross  register,  and  one  for  each  majority 
fraction  thereof,  who  shall  be  educated  in  the  duties  of 
seamanship,  rank  as  petty  officers,  and  receive  such  pay 
for  their  services  as  may  be  reasonable."* 

The  first  advertisements  for  proposals  under  this  act 
resulted  in  contracts  with  eleven  existing  lines,  of  the  third 
and  fourth  classes.  No  bids  were  received  for  the  North 
Atlantic  service  calling  for  American-built  steamships  in 
the  first  class.  But  an  offer  was  made  by  the  American 
Linef  to  begin  the  performance  of  the  service  with  two 
British-built  liners  —  the  City  of  New  York  and  the  City  of 
Paris  —  acquired  from  the  Inmun  Line,  if  these  steamers 

•United  States  Statutes  at  Large,  vol.   XXVI,  p.  830. 

tOriginally  the  International  Navigation  Company  established  111 
Philadelphia  in  1871,  and  beginning  service  between  Philadelphia  and 
Liverpool  with  (our  American-built  steamships. 


86  MANUAL   OF    SHIP   SUBSIDIES 

were  admitted  to  American  registry,  the  company  agreeing 
immediately  to  order  two  similar  ships  from  American  ship- 
yards and  add  these  to  their  fleet.  The  proposition  was 
accepted,  and  a  supplementary  act  was  passed  (May  10, 
1892),  legalizing  such  registry.*  The  new  American  ships 
were  promptly  built,  —  the  St.  Louis  and  the  St.  Paul, 
launched  November,  1894,  and  April,  1895,  respectively, — 
each  11,600  tons,  "larger,  swifter,  safer,  and  more 
luxurious  "f  than  the  two  British-built  vessels:  a  perfection 
of  workmanship  deemed  a  matter  for  congratulation  by 
patriotic  Americans.  To  this  extent  at  least  the  subsidy 
law  was  declared  to  have  been  beneficent. 

It  had  become  evident,  however,  that  the  law  was  not 
fostering  the  establishment  of  new  American-owned  and 
American-built  steamship  lines  as  its  promoters  had  hoped. 
In  1893  the  contract  service  had  been  reduced  by  the  dis- 
continuance of  three  of  the  routes.  In  1894  only  three 
contracts  were  in  operation.  Up  to  1898  no  lines  had 
been  established  on  the  Pacific  under  the  law. 

In  the  judgment  of  the  subsidy  advocates  the  law's 
failure  to  produce  the  anticipated  results  only  proved  its 
inadequacy  in  not  providing  enough  subsidy.  Accordingly, 
further  measures  were  proposed  affording  a  more  generous 
supply. 

In  December,  1898,  Senator  Mark  Hanna,  of  Ohio, 
brought  forward  a  bill  providing  liberal  navigation  and 
speed  bounties  to  all  American  vessels  engaged  in  the 
foreign  trade.  This  measure,  as  defined  by  its  title,  pro- 
posed "  to  promote  the  commerce  and  increase  the  foreign 
trade  of  the  United  States,  and  to  promote  auxiliary 
cruisers,  transports,  and  seamen  for  Government  use  when 
necessary."  The  subsidy  was  again  termed  "  compensation." 
It  was  to  be  payable  on  gross  tonnage  for  mileage  sailed 
both  outward  and  homeward  bound,  according  to  speed. 
The  rate  to  steamships  showing  on  trial  test  a  speed  above 
fourteen  knots  was  to  increase  proportionately;  sailing- 
ships  and  steamers  of  less  trial  speed  than  fourteen  knots, 
were  to  receive  the  lowest  rate.  This  was  fixed  at  one  dollar 


•United  States  Statutes  at  Large,  vol.  XXVII,  p.  27. 
t Marvin,  p.   421. 


MANUAL   OF   SHIP   SUBSIDIES  87 

and  fifteen  cents  per  gross  ton  for  each  hundred  of  the 
first  fifteen  hundred  miles  sailed  both  outward  and  home- 
ward bound,  and  one  cent  per  gross  ton  for  each  hundred 
miles  over  one  hundred  miles  both  ways.  The  additional 
speed  bounties  ranged  from  one  cent  per  gross  ton  for 
steamers  of  1,500  tons  and  speeding  fourteen  knots,  to  3.2 
cents  for  those  over  10,000  tons  and  showing  twenty-three 
knots.  The  act  was  to  be  in  force  for  a  term  of  twenty 
years,  and  no  contracts  were  to  be  made  under  it  after 
ten  years. 

The  Hanna  bill  met  strong  opposition,  and  was  finally 
dropped.  A  substitute  measure,  drawn  by  Senator  Frye, 
of  Maine,  took  its  place.  This  also  was  lost  with  the 
adjournment  of  the  Fifty-seventh  Congress.  At  the  open- 
ing of  the  next  Congress,  in  December,  1901,  Senator  Frye 
introduced  his  bill  in  an  amended  form.  This  offered 
subsidies  to  contract  mail-steamships  based  upon  tonnage 
and  speed,  and  practically  restored  the  rates  of  the  original 
Postal  Aid  Bill.  It  further  provided  a  fixed  subsidy  upon 
tonnage  to  other  American  steamers  and  sailing-ships, 
registered,  and  to  be  built  in  the  United  States.  The  bill 
passed  the  Senate,  but  failed  with  the  House. 

In  1903  the  matter  was  taken  up  with  greater  vigor,  by 
President  Roosevelt.  In  his  annual  message  to  Congress 
December  7,  the  President,  "  deeply  concerned  at  the  decline 
of  our  ocean  fleet  and  the  loss  of  skilled  officers  and  sea- 
men," recommended  the  appointment  by  Congress  of  a 
joint  commission  to  investigate  and  report  at  the  next 
session,  "  what  legislation  is  desirable  or  necessary  for  the 
development  of  the  American  merchant  marine  and  Ameri- 
can commerce,  and,  incidentally,  of  a  national  ocean  mail 
service  of  adequate  auxiliary  naval  cruisers  and  naval 
reserves." 

In  response  Congress  by  act  of  April  28,  1904,  created 
the  Merchant  Marine  Commission  with  power  to  make  the 
broadest  kind  of  an  inquiry.  This  body  was  composed  of 
five  Senators  and  five  Representatives,  two  of  the  Senators 
and  two  of  the  Representatives  members  of  the  minority 


88  MANUAL   OF   SHIP   SUBSIDIES 

party.  Senator  Jacob  H.  Gallinger  of  New  Hampshire  was 
chairman.  Eight  months  between  the  adjournment  and  re- 
assembling of  Congress  was  devoted  to  its  appointed  task. 
All  the  larger  ports  of  the  country  were  visited,  its  itinerary 
embracing  the  principal  cities  on  the  North  Atlantic  sea- 
board, on  the  Great  Lakes,  on  the  Pacific  coast,  and  on 
the  southern  coast  and  Gulf  of  Mexico.  Hearings  were 
given  in  all  these  places  to  hundreds  of  citizens:  commercial 
bodies,  shipbuilders,  shipowners,  shipping  merchants,  mer- 
chants in  general  trade,  manufacturers,  bankers,  lawyers, 
editors,  doctrinaires.  So  wide  indeed  was  the  investigation, 
and  so  liberal  the  "open  door  "  rule,  admitting  for  considera- 
tion any  "  intelligent  suggestion  offered  in  good  faith,"  that 
"  alien  agents "  of  foreign  steamships  were  heard  with  the 
rest.*  While  differences  of  opinion  as  to  methods  and 
policies  naturally  were  encountered,  the  commission  declared 
that  it  found  public  sentiment,  as  this  was  sounded  through- 
out the  United  States,  "  practically  unanimous  not  in  merely 
desiring,  but  in  demanding  an  American  ocean  fleet,  built, 
owned,  officered,  and  so  far  as  may  be,  manned  by  our  own 
people."  This  sentiment  was  "just  as  earnest  on  the  Great 
Lakes  .  .  .  as  on  either  ocean."* 

The  results  of  the  investigation  .were  embodied  in  an 
elaborate  report,  comprising  majority  and  minority  reports 
of  the  commission,  and  the  mass  of  testimony  taken  at  the 
hearings:  the  whole  filling  three  large  pamphlet  volumes,  in 
all  of  nearly  two  thousand  pages.f 

The  majority  reported  a  bill.  This  was  presented  as 
merely  an  extension  of  the  principles  of  the  Postal  Aid 
Act  of  1891,  involving  "no  new  departure  from  the  estab- 
lished practice  of  the  Government."  Its  ocean  mail  sec- 
tions were  intended  "simply  to  strengthen  the  existing  act 
on  lines  where  it  has  happpened  to  prove  inadequate."  The 
subsidies  which  it  granted  were  termed,  inoffensively,  "  sub- 
ventions," and  its  promoters  protested  that  these  "  subven- 

*Report  of  The  Merchant  Marine  Commission  (1904),  vol.  I,  p. 
III. 

tReport  of  The  Merchant  Marine  Commission,  together  with  the 
testimony  taken  at  the  Hearings,  3  vols.,  p.  1985 ;  Senate  Report,  no. 
2755,  58th  Cong.,  3d  sess. 


MANUAL   OF   SHIP    SUBSIDIES  89 

tions "  were  "  not  in  any  opprobrious  sense  a  subsidy  or 
bounty."  They  were  "  not  bounties  outright,  or  mere  com- 
mercial subsidies  such  as  many  of  our  contemporaries  give." 
They  were  "  granted  frankly  in  compensation  for  public 
services  rendered  and  to  be  rendered."* 

The  proposed  measure,  however,  was  more  than  an  exten- 
sion of  the  act  of  1891.  Its  scope  was  indicated  by  its  title: 
"  To  promote  the  national  defence,  to  create  a  force  of  naval 
volunteers,  to  establish  American  ocean  mail  lines  to  foreign 
markets,  to  promote  commerce,  and  to  provide  revenue 
from  tonnage."  The  subsidies  offered  comprised  mail  sub- 
ventions to  steamships;  subventions  to  general  cargo  carriers 
and  deep-sea  fishing-ships,  both  steam  and  sail ;  and  retainers 
to  officers  and  men  of  American  merchant  ships  and  deep- 
sea  fishing  vessels  enrolling  as  naval  volunteers.  It  opened 
with  provisions  for  the  establishment  of  a  naval  reserve. 

The  new  mail  subsidies  provided  for  ten  specified  lines 
of  "steamships  of  the  United  States"  of  sixteen,  fourteen, 
thirteen,  and  twelve  knots  speed,  to  the  greater  countries 
of  South  America,  to  Central  America,  to  Africa,  and  to 
the  Orient,  with  a  total  maximum  subsidy  for  the  ten  lines 
of  $2,665,000  a  year.  In  all  contracts  it  was  to  be  specified 
that  the  steamships  must  carry  in  their  own  crews  a  certain 
increasing  proportion,  up  to  one-fourth,  of  men  enrolled 
as  naval  volunteers.  The  subventions  to  American  general 
cargo  carriers,  or  the  "  tramp  "  type  of  ships,  and  deep-sea 
fishing-vessels,  steam  or  sail,  were  fixed  at  these  rates: 
those  engaged  in  the  foreign  trade  for  a  full  year,  five 
dollars  per  gross  ton;  so  engaged  for  nine  months  and  less 
than  a  year,  four  dollars;  for  six  months,  two  dollars. 
These  subsidies  were  conditioned  upon  these  requirements: 
the  employment  in  the  crews  of  a  certain  proportion  of 
naval  volunteers;  one-sixth  of  the  crews  to  be  citizens  of 
the  United  States  or  "  men  who  have  declared  their  inten- 
tions to  become  citizens;"  ships  to  carry  the  mails  when  re- 
quired free  of  charge;  all  ordinary  repairs  to  be  made  in 
the  United  States;  the  ships  to  be  in  readiness  for  Govern- 
ment taking  for  naval  service  in  time  of  need.  The  pay- 

•Same:    Report  of  the  majority,  vol.  1,  pp.  XXIII,  XXX,  XXXI. 


90  MANUAL   OF    SHIP   SUBSIDIES 

merits  in  this  class  were  to  be  made  on  contracts  for  a  year 
at  a  time,  renewable  from  year  to  year;  and  no  vessel  was 
to  receive  them  for  a  longer  period  than  ten  years.  The 
retainers  to  officers  and  men  of  the  merchant  marine  and 
deep-sea  fishing-ships  as  inducements  to  enroll  as  naval 
volunteers,  were  fixed  at  rates  ranging  from  a  hundred 
dollars  a  year  for  the  master  or  chief  engineer  of  a  large 
steamship  to  twenty-five  dollars  for  a  sailor  or  fireman, 
and  fifteen  dollars  for  a  boy,  these  retainers  being  inde- 
pendent of  their  regular  pay.  The  provisions  relating  to 
tonnage  revenue  increased  the  tonnage  taxes  on  all  vessels, 
American  and  foreign,  entering  American  ports,  with  a 
rebate  of  eighty  per  cent  of  the  tonnage  duties  allowed  to 
American  ships  carrying  American  boys  as  apprentices  and 
training  them  in  seamanship  or  engineering  for  the  merchant 
service  and  naval  reserve.* 

The  minority  report,  signed  by  three  of  the  four  Demo- 
cratic members  of  the  commission,  although  outlining 
measures  of  relief  which,  in  the  judgment  of  the  signers, 
would  "  accomplish  substantial  and  permanent  good  with- 
out injustice  to  any  other  American  interest  and  without 
doing  violence  to  any  fundamental  principle  of  right  or  of 
organic  law,"  proposed  no  bill.  While  the  minority  "  saw 
objections  to  the  entire  bill"  recommended  by  the  majority, 
they  were  disposed  to  withhold  any  opposition  except  to 
the  sections  providing  for  direct  subsidies.  These  they 
declared  to  be  "so  obnoxious  to  Democratic  principles  and 
to  the  economic  sense  of  the  country  "  that  they  were  com- 
pelled to  enter  their  "  earnest  protest  against  their  enact- 
ment into  law."  Instead  of  subsidies,  the  remedial  legislation 
which  they  outlined  included:  a  return  to  the  discriminating- 
duty  policy;  and  the  putting  on  the  free  list  of  all  materials 
which  enter  into  the  construction  of  ships  no  matter 
whether  intended  for  foreign  or  domestic  trade,  —  thus 
admitting  ships  built  from  foreign  materials,  in  whole 
or  in  part,  to  the  coastwise  trade,  from  which  they  are  now 
excluded.  The  minority  held  also  that  it  would  probably 

•This   bill   in   Report   of   the   Merchant   Marine  Commission,   vol.    I, 
pp.  XLVI,  LL 


MANUAL   OF   SHIP   SUBSIDIES  91 

"  be  necessary  to  remove  the  duties  not  only  for  materials 
but  from  all  materials  sold  cheaper  abroad  than  at  home," 
meaning  steel  and  iron  products.  "  In  this  way,  and  in  this 
way  only,  will  our  shipbuilders  be  enabled  to  obtain  our 
materials  at  the  prices  at  which  they  are  sold  to  foreign 
shipbuilders."* 

The  report  of  the  commission  was  submitted  to  the 
Fifty-eighth  Congress,  third  session,  January  4,  1905.t  No 
action  was  had  on  the  bill  in  that  Congress.  It  was  referred 
to  the  committee  on  commerce;  reported  back  to  the 
Senate  with  sundry  amendments  and  a  minority  report 
against  it;!  was  debated  tentatively;  and  finally  passed 
over  at  the  request  of  its  sponsor,  Senator  Gallinger,  who 
expressed  himself  as  satisfied  that  the  bill  could  not  receive 
the  consideration  it  deserved  at  that  session.  Meanwhile 
both  Houses  had  directed  a  continuance  of  the  commission's 
inquiry.  In  May  the  chairman,  Senator  Gallinger,  held 
conferences  in  New  York  with  several  representatives  of 
the  shipping  interests  who  had  not  been  heard;  and  later 
sessions  were  held  in  Washington,  at  which  other  state- 
ments were  received  and  considered. 

At  the  opening  of  the  Fifty-ninth  Congress,  December  4, 
1905,  Senator  Gallinger  submitted  a  supplementary  report 
of  the  commission,  and  with  it  introduced  a  new  bill  —  the 
previous  bill  in  a  new  draft.**  At  the  same  time  Repre- 
sentative Charles  H.  Grosvenor,  of  Ohio,  the  first  House 
member  of  the  commission,  introduced  the  bill  to  the  House. 

This  draft  added  several  new  features  to  the  original 
bill.  The  most  important  were  provisions  for  increasing 
the  subsidies  payable  under  the  law  of  1891  to  the  single 
American  contract  line  to  Europe,  and  to  the  Oceanic  Line 
from  San  Francisco  to  Auckland  and  Sydney.  These  pro- 
visions added  two  hundred  and  fifty  thousand  dollars  to  the 
former's  subsidy  of  seven  hundred  and  fifty  thousand,  and 
two  hundred  and  seventeen  thousand  to  the  letter's  of  two 
hundred  and  eighty-three  thousand.  The  reasons  given  for 

*Rept.   of  The  Merch.   Marine  Com..  Views  of  the  Minority,  Vol.  I, 
p.  LVI. 

tSenate  bill,   6291,   5Sth   Cong.,   3d   SPSS. 
{Senate  Report  no.   2949,   58th  Cong.,   3d  sess. 
"Senate  Report  no.   1,    59th  Cong.,   1st   Beat. 


92  MANUAL   OF    SHIP   SUBSIDIES 

these  increases  were:  in  the  case  of  the  American  Line,  be- 
cause this  line  "  meets  the  fiercest  competition  of  the  State- 
aided  corporations  of  Europe,  soon  to  be  intensified  by  the 
new  subvention  of  one  million  one  hundred  thousand  dollars 
granted  to  the  Cunard  Company  by  the  British  Govern- 
ment, on  terms  so  liberal  as  to  make  it  equivalent  to  one 
and  a  half  million  dollars  a  year  " ;  and  in  the  case  of  the 
Australasia  Line,  because  it  "  operates  in  Pacific  waters 
where  cost  of  fuel,  labor,  etc.,  is  considerably  greater  than 
at  Atlantic  ports;  ...  is  required  to  maintain  a  very 
high  speed;  .  .  .  employs  exclusively  white  crews  in- 
stead of  the  Asiatics  utilized  by  many  other  Pacific  com- 
panies." Another  provision,  as  a  special  encouragement 
for  American  shipowners  to  enter  the  Philippine  trade, 
added  a  subvention  of  thirty  per  cent  above  the  regular  rate, 
or  six  and  a  half  dollars  a  ton.  The  naval  volunteer  re- 
tainers were  extended  to  seamen  of  the  Great  Lakes  and 
coastwise  trade.* 

In  the  Senate  the  bill  fared  well  as  a  whole.  Like  the 
original  bill  it  came  back  from  the  committee  on  commerce 
amended,  though  slightly,  and  with  a  minority  report  against 
it:  the  minority  again  emphasizing  their  "unqualified  oppo- 
sition to  this  renewed  effort  to  donate  to  certain  favored 
interests  moneys  collected  by  the  Government  for  public 
purposes  under  its  power  of  taxation."f  It  was  closely 
fought  by  the  opposition  in  debate,  opened  with  Senator 
Gallinger's  argument  in  its  behalf  on  January  8,  1906.  But 
it  successfully  ran  the  gauntlet.  Further  amended  in  several 
particulars,  but  unscathed  in  its  essential  parts,  it  passed  the 
Senate,  February  14,  by  a  vote  of  38  to  27,  five  Republican 
Senators  and  all  the  Democrats  voting  in  the  negative.^ 

In  the  House  its  progress  was  less  prosperous.  It  lay 
with  the  committee  on  merchant  marine  and  fisheries  into 
the  second  session  of  this  Congress;  and  more  hearings 
were  given.  Reframed  after  the  enacting  clause,  but  prac- 
tically the  same  in  principle,  it  was  reported  back  January 
19  (1907)  by  Mr.  Grosvenor,  accompanied  by  an  explanatory 

•Senate   Report   no.    1,  59th  Cong.,    1st   sees.     This   bill   is   Senate 
no.   529. 

tSenate  Report  no.    10,  59th  Cong.,   1st  sess. 

JCong.  Record,  vol.   40,  part  1,  59th  Cong.,  2d  sess. 


MANUAL   OF   SHIP   SUBSIDIES  93 

report  of  the  majority  of  the  committee;*  and  bill  and 
report  were  referred  to  the  whole  House  on  the  state  of 
the  Union.  Later  the  views  of  the  minority  were  filed.* 
On  January  23  a  message  from  President  Roosevelt  in  behalf 
of  the  measure  was  received.  The  president  particularly 
urged  the  "  great  desirability  of  enacting  legislation  to  help 
American  shipping  and  American  trade  by  encouraging  the 
building  and  running  of  lines  of  large  and  swift  steamers  to 
South  America  and  the  Orient."  As  striking  evidence  of  the 
"  urgent  need  of  our  country's  making  an  effort  to  do  some- 
thing like  its  share  of  its  own  carrying  trade  on  the  ocean," 
he  directed  attention  to  the  address  of  Secretary  Root  before 
the  Trans-Mississippi  Commercial  Congress  at  Kansas  City, 
Mo.,  the  previous  November,  giving  the  results  of  the  secre- 
tary's experiences  on  his  recent  South  American  tour.  The 
proposed  law,  Mr.  Roosevelt  repeated,  was  in  no  sense 
experimental.  It  was  "based  on  the  best  and  most  success- 
ful precedents,  as  for  instance  on  the  recent  Cunard  con- 
tract with  the  British  Government."  So  far  as  South 
America  was  concerned,  its  aim  was  to  "  provide  from  the 
Atlantic  and  Pacific  coasts  better  American  lines  to  the 
great  ports  of  South  America  than  the  present  European 
lines."  Under  it  "  our  trade  friendship  "  would  "  be  made 
evident  to  the  South  American  Republics."f 

Backed  by  the  explanatory  report  and  this  message, 
the  friends  of  the  measure  opened  the  debate,  February  25, 
Mr.  Grosvenor  leading.  It  was  a  great  debate,  long  and  hot. 
Numerous  amendments  were  put  in;  some  changing  the 
proposed  routes,  others  adding  new  ones.  At  length  on 
March  1,  three  days  before  the  end  of  this  Congress,  the 
much  amended  bill  was  passed,  and  went  back  to  the 
Senate  for  concurrence.! 

As  it  now  stood  it  was  shorn  of  the  provisions  for  lines 
from  the  Pacific  coast  to  Japan,  China,  the  Philippines,  and 
Australasia.  The  new  subsidized  lines  were  all  to  run  to 
South  America.  Two  of  these  were  to  run  from  the  Atlantic 
coast  to  Brazil  and  Argentina,  respectively;  one,  from  the 

•House  Report  no.    6442,    59th   Cong.,   2d   sess. 

tHouse  Doc.  no.  4638,  59th  Cong.,  2d  sess. 

JCong.   Record,  vol.   41,   part  5,   59th  Cong.,   2d  sess.,  p.   4378. 


94  MANUAL   OF   SHIP   SUBSIDIES 

Pacific  coast  to  Peru  and  Chile;  and  one  from  the  Gulf  of 
Mexico  tq  Brazil.  On  all  four  lines  sixteen-knot  steamers 
were  required,  with  speed  on  the  average  above  the  European 
mail  lines  to  South  America.  The  subsidies  were  reserved 
exclusively  to  ships  to  be  built  in  the  United  States,  so 
that  the  mail  service  could  not  be  performed  by  existing 
steamers;  thus  a  wholly  new  ocean-mail  fleet  was  guar- 
anteed.* 

The  bill  was  reached  in  the  Senate  March  2,  and 
strenuous  efforts  were  made  by  Senator  Gallinger  and  others 
to  push  it  through.  But  it  failed  in  the  closing  hours  of 
the  session  to  reach  a  vote.  So  this  measure  fell.f 

Another  effort  was  made  in  the  Sixtieth  Congress.  In 
his  message  at  the  beginning  of  this  Congress  (December  2, 
1907)  President  Roosevelt  recommended  an  amendment  to 
the  act  of  March  3,  1891,  "which  shall  authorize  the  post- 
master-general in  his  discretion  to  enter  into  contracts  for 
the  transportation  of  mails  to  the  Republics  of  South 
America,  to  Asia,  the  Philippines,  and  Australia  at  a 
rate  not  to  exceed  four  dollars  a  mile  for  steamships  of 
sixteen-knots  speed  or  upward,  subject  to  the  restrictions 
and  obligations "  of  that  act.  In  other  words,  to  give  the 
same  subsidy  to  steamers  in  these  services  as  allowed  to  the 
twenty-knot  American  mail  transatlantic  line,  instead  of  two 
dollars  a  mile.J  A  bill  to  this  effect  was  introduced  in  the 
Senate  December  4**;  on  February  3,  1908,  was  reported 
back  from  the  committee  on  commerce  so  amended  as  to 
provide  the  four-dollar-a-mile  subsidy  to  American  sixteen- 
knot  steamers  on  routes  of  four  thousand  miles  or  more  to 
South  America,  the  Philippines,  Japan,  China,  and  Austral- 
asia; was  debated  at  length;  further  amended;  and  finally 
passed,  March  20.  In  the  House  it  was  referred  to  the 
committee  on  post  office  and  post  roads  ;ft  issued  there- 
from in  a  dew  draft ;tt  debated;  and  finally  failed  to  pass. 

•Cong.   Record,   59th  Cong.,  2d   sess.,   p.   4638. 
tSame,  p.   4653. 

JSenate  Report  no.    168,   60th  Cong.,   1st  sess. 
**Senate  bill  no.   28,    60th  Cong.,   1st  sess. 
ttCong.  Record,  65th  Cong.,  p.  3743. 
ttHouse  bill  no.  22301,  60th  Cong.,  1st  sess. 


MANUAL   OF   SHIP   SUBSIDIES  95 

Thereupon  the  subsidized  service  to  Australia  by  way  of 
Honolulu  and  the  Samoan  group  was  abandoned. 

Again  the  measure  was  pressed  in  the  Sixty-first  Con- 
gress. It  now  had  the  backing  of  President  Taft.  In  his 
annual  message  December  9,  1909,  "  following,"  as  he  gra- 
ciously said,  "the  course  of  my  distinguished  predecessor," 
he  earnestly  recommended  the  passage  of  a  "  ship-subsidy 
bill  looking  to  the  establishment  of  lines  between  our  Atlan- 
tic seaboard  and  the  eastern  coast  of  South  America,  China, 
Japan,  and  the  Philippines."  The  bill,  as  introduced  by 
Senator  Gallinger  (February  23,  1910),  provided  for  sub- 
sidized lines  of  the  second  and  third  classes  on  routes  to 
the  points  named  by  Mr.  Taft,  four  thousand  miles  or  more 
in  length  outward  voyage,  or  on  routes  to  the  Isthmus  of 
Panama:  the  second  class  to  receive  the  subsidy  rate  per 
mile  provided  in  the  law  of  1891  for  steamers  of  the  first 
class,  and  the  third  class  the  rate  applicable  to  the  second 
class.  If  no  contract  should  be  made  for  a  line  between  a 
Southern  port  and  South  American  ports,  and  two  or  more 
should  be  established  from  Northern  Atlantic  ports,  it  was 
required  that  one  of  the  latter  should  touch  outward  and 
homeward  at  two  ports  of  call  south  of  Cape  Charles.  The 
total  expenditure  for  foreign  mail-service  in  any  one  year 
was  limited  —  not  to  exceed  the  estimated  revenue  therefrom 
for  that  year.* 

The  bill  came  back  from  the  committee  on  commerce  in 
March  without  amendment,  and  with  a  report.f  In  June  it 
was  put  over  for  consideration  in  December  of  the  third 
session  of  this  Congress.  When  at  length  it  was  reached, 
Senator  Gallinger  submitted  a  substitute.  This,  instead  of 
naming  the  points  to  be  covered,  provided  for  subsidized 
routes  to  South  America  south  of  the  equator  outward  voy- 
age; provided  for  one  port  of  call  instead  of  two  on  the 
Southern  Atlantic  coast;  guarded  against  "discrimination 
detrimental  to  the  public  interest,"  in  other  words  "  com- 
bines," by  a  provision  that  no  contract  be  awarded  to  any 
bidder  engaged  in  any  competitive  transportation  business 

•Senate  bill  no.  6708,   60th  Cong.,  2d  SffiS. 
tSenate  Repbrt  no.  354,  same. 


96  MANUAL   OF    SHIP   SUBSIDIES 

by  rail,  or  in  the  business  of  exporting  or  importing  on 
his  own  account,  or  bidding  for  or  in  the  interest  of  any 
person  or  corporation  engaged  in  such  business,  or  having 
control  thereof  through  stock  ownership  or  otherwise;  and 
fixed  the  limit  of  the  total  expenditure  for  foreign  mail 
service  in  any  one  year  at  four  million  dollars.  This  substi- 
tute was  finally  passed  on  February  12,  1911,  by  a  vote  of 
39  to  39,  the  chairman  casting  his  vote  in  the  affirmative. 
In  the  House  the  measure  went  to  the  committee  on  post 
office  and  post  roads;  and  there  rested. 

Various  other  subsidy  bills  and  measures  for  the  revival  of 
the  ocean  merchant  marine  without  subsidies,  were  put  into 
this  Congress,  as  in  previous  ones,  but  few  escaped  from  the 
committees ;  and  these  few  fell  short  of  passage. 


CHAPTER  XIV 
SUMMARY 

SHIP  subsidies,  open  or  concealed,  are  now  granted  by 
nearly  every  maritime  nation.  Whatever  may  be  the 
designation  of  these  Government  grants,  —  whether 
mail  subsidies,  naval  subventions,  retaining  fees  for  possible 
naval  service,  construction  bounties,  navigation  bounties, 
trade  bounties,  Government  loans,  Government  partnerships, 
tariff  advantages,  canal  refunds,  —  whatever  may  be  their 
form,  all  are  distinctly  Government  aids,  direct  or  indirect, 
the  primary  object  of  which  is  the  development  and  ex- 
pansion of  the  merchant  marine  of  each  nation  granting 
them;  and  generally,  if  not  universally,  the  upbuilding  of 
this  marine  for  service  in  time  of  need  as  an  auxiliary  to  the 
national  navy. 

Summarized,  the  various  grants  of  the  various  nations 
thus  appear: 

Great  Britain  grants  mail  subsidies,  and  admiralty  sub- 
ventions; her  colonies,  steamship  subsidies. 

France:  mail  subsidies;  construction  and  navigation 
bounties;  fisheries  bounties. 

Germany:  mail  subsidies;  steamship. subsidies;  preferen- 
tial rates  on  the  State  railroads  for  shipbuilding  materials. 

Belgium:  premiums  to  certain  steamship  lines;  pilotage 
refunds. 

Austria-Hungary:  mail  subsidies;  construction  and  navi- 
gation bounties;  Suez  Canal  refunds.  Hungary;  bounties  to 
Hungarian  ships. 

Italy:  mail  subsidies;  construction  and  navigation  boun- 
ties. 

Spain:  mail  subsidies;  construction  and  navigation  boun- 
ties. 

Portugal:  mail  subventions  to  steamship  companies. - 

Denmark:  trade  subsidies;  exemptions  from  harbor  dues. 

Sweden:  State  contributions  —  loans  to  steamship  com- 
panies. 

87 


98  MANUAL   OF   SHIP  SUBSIDIES 

Norway:  State  contributions;  trade  subsidies. 

Russia:  mail  subsidies;  mileage  subsidies;  Government 
loans;  steamship  subsidies;  Suez  Canal  refunds. 

Japan:  State  aid  to  steamship  companies;  mail  subsidies; 
construction  and  navigation  bounties;  fisheries  bounties. 

China:  State  aid  to  steamship  companies;  subsidies  to 
ship-yards. 

South  America:  Brazil  and  Argentina,  subsidies  to 
foreign  steamship  companies. 

United  States:  mail  subsidies  to  seven  steamship  lines. 

The  United  States  confines  the  coastwise  trade  to  Ameri- 
can ships,  and  these  are  exempted  from  tonnage  dues.  It 
excludes  foreign-built  ships  from  American  registry,  admit- 
ting only  American  ships,  or  those  taken  in  war  as  prizes 
or  forfeited  for  a  breach  of  United  States  laws,  belonging  to 
American  citizens.*  Ownership  of  American  ships  is  re- 
stricted to  "  citizens  of  the  United  States,  or  a  corporation 
organized  under  the  laws  of  any  of  the  States  thereof/'f 
The  master  of  an  American  ship,  and  all  officers  in  charge  of 
a  watch,  including  the  pilots,  must  be  American  citizens. 
Since  1871  foreign  materials  for  ship-building  have  been  ad- 
mitted free  of  duty.  Since  1909  such  materials,  and  all 
articles  necessary  for  the  outfit  and  equipment  of  ships,  have 
been  duty-free,  with  this  proviso:  that  vessels  receiving  these 
rebates  of  duties  "  shall  not  be  allowed  to  engage  in  the 
coastwise  trade  of  the  United  States  more  than  six  months 
in  any  one  year,"  except  upon  repayment  of  the  duties  re- 
mitted ;  and  that  vessels  built  for  foreign  account  and  owner- 
ship shall  not  engage  in  this  trade.J 

In  1910  the  subsidized  American  service  covered  only  the 
one  transatlantic  line  from  New  York  to  Southampton,  call- 
ing at  Plymouth  and  Cherbourg;  lines  to  the  north  coast  of 
South  America  —  to  Venezuela;  to  Mexico;  to  Havana;  to 
Jamaica;  and  on  the  Pacific,  from  San  Francisco  to  Tahiti. 

The  total  cost  of  the  service  for  the  year  on  these  seven 
subsidized  routes  was  $1,114,603.47,  a  net  excess  over  the 
amount  allowable  at  present  rates  to  steamers  not  under 

'Registry  law  of   1792,   in   Revised  Statutes,   sec.   4132. 

tRevised   Statutes,   sec.   4131. 

{Tariff  act  of  Aug.  6,  1909,  sec.  19. 


MANUAL   OF   SHIP   SUBSIDIES  99 

contract  of  $346,677.39;  or,  deducting  the  amount  which 
would  have  been  paid  non-contract  steamers  for  the  despatch 
of  the  foreign  closed  mails  which  these  steamers  carry  with- 
out additional  cost  to  the  department,  a  total  excess  of 
$293,013.40.*  "  All  other  mail  service  between  the  United 
States  and  foreign  countries,"  the  postmaster-general  re- 
gretfully reported,  is  "wholly  dependent  on  steamships  over 
whose  sailings  the  department  has  no  control."f 

The  total  tonnage  of  the  United  States  in  1910  as  given 
by  Lloyd's  was  5,058,678  tons: 

No.  of  vessels.        Tons. 

Sea    2774  2,761,605 

Northern  Lakes  606  2,256,619 

Philippine  Islands 89  40,454 


Total   3469  5,058,678 

The  number  of  ships  on  the  lakes  as  given  does  not  in- 
clude wooden  vessels  trading  on  the  Great  Lakes.  While 
the  ocean  tonnage  has  declined  from  more  than  two  and  a 
half  million  tons  in  1861  to  some  eight  hundred  thousand 
tons,  that  engaged  in  the  coastwise  and  inland  trade  has 
steadily  increased  for  many  years.J  On  the  Great  Lakes 
especially  is  employed  a  fine  and  powerful  merchant  fleet. 

•Postoffice   Department   report,    1910. 
tPostmaster-general  Hitchcock,  report,   1910. 
^American  Tear  Book,  1011. 


THE    EKD. 


INDEX 


Adriatic,  the  steamer,  77,  78 
American  Shipping  League,  83 
American  Steamship  Company, 

23,    85 
American     Year    Book,     reference 

to,   25 
Anderson,    Com.    Gen.    George    E., 

reference    to,    68 
Arctic,  the  steamer,   75,  76,   77 
Argentina,  use  of  subsidies  in,  68 
Aspinwall,  W.   H.,   73,  75 
Atlantic,    the   steamer,    75,   76 
Atlantic   Transport   line,    23 
Auguste   Victoria,  the  steamer,  39 
Australasia    line,    92 
Australian   line,    38,    40,    42 
Austria-Hungary,    history    of    the 
use  of  subsidies  in,  44-49  ;  pro- 
visions  for   two   classes   of  sub- 
sidies   in,    45,    46 ;    increase   in 
the      proportion      of      steamers 
built  in,   46,   47 ;    total  of  ton- 
nage  in,    49 ;    grants  of,   97 
Austrian    Lloyd    Company,    44,    46 
Austro-American     Shipping     Com- 
pany,   48 

Austro-Hungarian  Lloyd  Company, 
see   Austrian  Lloyd  Company. 

BABBITT,  VICE  CON.   GEN.  E.  G., 

reference    to,   66 
Baltic,   the  steamer,   75,   76 
Barker,   J.   Ellis,   reference    to   his 

"Modern    Germany,"   37,   39-41. 
Bates,    W.    W.,    reference    to    his, 

"American  Marine,"  14,  17,  20, 

78,    79 
Belgium,  use  of  subsidies  in,   42, 

97 

Bismarck's   Memorial   to   the   Ger- 
man Reichstag,  reference  to,  60 
Black    Sea    Navigation    Company, 

61 

Brazil,  use  of  subventions  in,   68 
Britannia,    the    steamer,    18 
Brown,   James,   71 
Brown,    Stewart,    71 

California,    the   steamer,    74 
Canada,     granting    of     mail     and 
steamship    subsidies  by,    24,    25 
Cargo  Ship  Bill,  the,  83,  84 
Charleston  and  Havana  line,  74 
Chargeurs  R6unis,  36 
Chile,  use  of  mail  subsidies,  68 
China,  use  of  subsidies  in,  67,  98 


Chinese  Merchants'  Steam  Naviga- 
tion   Company,   67 
City   of   New    York,    the   steamer, 

85 

City  of  Paris,  the  steamer,  85 
"Clippers,"  American,  69,  78 
Colbert,  finance  minister  of 

France,    26 

Collins,  Edward  K.,  71,  72,  76 
Collins  line,  the,  19,  20,  21,  75-78 
Columbia,    the    steamer,    75 
Campagnie    des   Messageries   Mari- 

times,    36 

Compagnie  Fraissant,   36 
Compagnie      Gen&ale    Transatlan- 

tique,   36 
Compaflia  Transatlantica  EspaBola, 

La,   54 
Cromwell,    code    of,    see    Maritime 

Charter   of   England,    Great, 
Cunard,    Samuel,    17 
Cunard    Company,    19-23,    25,    71, 

76,   77,    92,    93 
Curagoa,  the  steamer,  16 

DAWSON,  GEN.  WILLIAM,  JR.,  ref- 
erence to,  54 

Denmark,  granting  of  postal  sub- 
ventions and  "trade"  subsidies 
by,  57,  97 

Dominion  line,  23 

"Dramatic   line,"   76 

Dutch  East  Indian  lines,  42 

EAST  AFRICAN  LINE,  40 
East  Asian  line,  38,  40,  42 
England,  history  of  the  use  o( 
subsidies  in,  11-25 ;  first  navi- 
gation law  of,  11 ;  Great 
Maritime  Charter  of,  11-15 ; 
Cromwell's  code  for,  12 ;  com- 
petition between  the  United 
States  and,  14,  19,  20 ;  testing 
of  steam  for  navigation  in,  15, 
16 ;  building  of  steamships,  16- 
24 ;  total  of  subsidies  paid  in, 
25 ;  grants  of,  97 

Falcon,  the  steamer,  74,  75 

Farquhar,   James  M.,   83 

France,  history  of  the  use  of  sub- 
sidies in,  26-36  ;  the  navigation 
laws  of,  26 ;  the  disappearance 
of  the  domestic  mercantile 
marine  of,  27 ;  commercial 
treaty  between  England  and, 
28 ;  the  Merchant  Marine  Act 


101 


of,  29-35 ;  organization  of 
steamship  companies  in,  30-32  ; 
granting  of  "shipping  pre- 
miums" in,  32 ;  total  cost  of 
bounty  system  in,  35 ;  capacity 
of,  for  building  steamships,  36 ; 
grants  of,  97 

Franklin,    the    steamer,    74,    78 
Frye,    William    P.,    83,    87 

GAFFNEY,  T.   ST.  J.,  U.   S.  Con- 
sul, 62 
Gallinger,  Jacob   H.,   87,   91,   92, 

94,  95 

Georgia,  the  steamer,  75 
German-Australian  line,  42 
Germany,  history  of  the  use  of 
subsidies  in,  37-41 ;  first  steps 
in  domestic  shipbuilding  in,  37  ; 
establishment  of  a  subsidized 
mail  service  in,  38 ;  building 
of  large  steamships  in,  39;  ex- 
traordinary growth  of  the  mer- 
chant marine  in,  40,  41 ; 
grants  of,  97 

Great   Britain,    the  steamer,   18 
Great  Western,  the  steamer,  16,  17 
Great    Western    Steamship     Com- 
pany, 17,  18 

Green,   John    R.,   reference    to   his 
"Short    History   of    the  English 
People,"   11,   13 
Greener,   Gen.   R.   T.,  U.  S.   Con., 

reference    to,   60 
Grosvenor,  Charles  H,,  91-93 

HAMBURG-AMERICAN  lines,  22, 39,40 
Hanna,   Mark,   86 
Harris,    Arnold,    72,    73 
Hermann,    the    steamer,    73 
Hitchcock,          Postmaster-General, 

reference   to   Report  of,   99 
Hoar,    George    Frisbie,    79 
Holland,    maritime    supremacy   of, 

12,    13,     26,    42 ;    granting    of 

subventions    for    carrying    mails 

in,    42 

Humboldt,  the  steamer,   74,   78 
Hungary,  see   Austria-Hungary 

Illinois,    the   steamer,    23,    75 

Indiana,  the  steamer,  23 

Inman,  John,   20 

"Inman   Line,"   20-23,   85 

"International  Mercantile  Marine 
Company,"  23,  24 

International  Navigation  Company, 
see  American  Line 

Italian  General  Navigation  Com- 
pany, 53 

Italy,  history  of  the  use  of  sub- 
sidies in,  50-53 ;  construction 
subsidies  provided  for  in,  50- 
52 ;  mail  subvention  system  of, 
52,  53  ;  increase  of  tonnage  in, 
53 ;  grants  of,  97 


JAPAN,  history  of  the  use  of  sub- 
sidies in,  63-67,  98 

Japan  Mail  Steamship  Company, 
see,  Xippon  Yusen  Kaisha,  the 

Japan  Year  Book,  reference  to, 
66,  67 

Jwasaki  Yataro,  the  Japanese  mer- 
chant, 63 

LAW,  GEORGE,   72 

Lindsay,  W.  H.,  reference  to  his 
"History  of  Merchant  Ship- 
ping," 11,  12,  14,  18-20,  27-29 ; 
also  his,  "Our  Navigation 
Laws,"  12 

Lloyd  Brazileiro,  the,  68 

Lloj'd    Italiano   line,   53 

Lloyd's  Register,  reference  to,  25, 
36,  41,  42,  49,  53,  56-58, 
61,  67 

Lusitania,    the   steamer,    24 

Lynch,    John,   81 

Lynch   bounty    bill,    81 

MACGREGOR,  JOHN,  reference  to 
his,  "Commercial  Tariffs,"  14 

Mcllvaine,  Bowes,  72 

Mail  Ship  Bill,  the  83,  84 

Maritime  Charter  of  England, 
Great,  11-15 

Marvin,  Winthrop  L.,  reference 
to  his  "American  Merchant 
Marine,"  19,  69,  76,  78,  79, 
84,  86 

Mauretania,  the  steamer,  24 

Meeker,  Royal,  reference  to  his 
"History  of  Ship  Subsidies,"  11, 
13,  17,  18,  20,  21,  23,  29-36, 
39,  40,  42-45,  47,  48,  50-53, 
55-57,  59,  62-65,  68,  71-75,  77, 
78,  83 

Merchant  Marine  Commission,  the, 
87-90 

Miller,  Con.  Gen.  H.  B.,  refer- 
ence to,  65 

Mills,   Edward,   71 

Mordecai,  M.  C.,  73 

Morgan,  J.   Pierpont,   23 

"Morgan  Steamship  Merger,"  see 
"International  Mercantile  Ma- 
rine Company" 

NAVIGATION,    Report    of    (U.    S.) 

commissioner    of,    reference    to, 

24 
Navigation  law,  first  English,  11, 

13 

New  Orleans  packet  line,  76 
New    York,    Havre,    and    Bremen 

line,   19,  70,  73,  78 
New  York  and   Chagres  line,    74, 

75 
Nippon  Yusen  Kaisha,  the,  63,  65, 

67 
North  German  Lloyd  line,  21,  22, 

38-40,   42 


102 


Norway,  granting  of  subsidies  for 
mail  carriage  by,  57,  58,  98 

O'BRIEN,  THOMAS,  U.  S.  Ambas- 
sador, reference  to,  67 

Ocean  Steam  Navigation  Com- 
pany, 71 

Ohio,    the   steamer,    23,   75 

Olympic,  the  steamer,  24 

Oregon,  the  steamer,   74 

Pacific,  the  steamer,  75-77 

Pacific  Mail  Steamship  Company, 
73-75,  80,  82,  83 

Pacific  Steam  Navigation  Com- 
pany, 19 

Panama,  the  steamer,  74 

Parliamentary  papers,  reference  to, 
22 

Pennsylvania,   the  steamer,   23 

Portugal,  granting  of  postal  sub- 
ventions and  subsidies  by,  56, 
97 

Postal  Aid   Law,   the,   83,   87,   88 

Postal  Ocean  Steamship  Com- 
pany, 35,  36 

Preble,  George  H.,  reference  to 
his,  "Chronological  History  of 
Steam  Navigation,"  16,  17,  19 

Princeton,  sloop-of-war,  the,   19 

RED  STAR  LINE,  23 

Ricardo,  John  Lewis,  reference  to 
his,  "Anatomy  of  the  Naviga- 
tion Laws,"  12,  13 

Roach,    John,    83 

Roberts,  Marshall  O.,  72 

Roosevelt,    President,    87,    93,    94 

Root,    Secretary,    93 

Royal  Mail  Steam  Packet  Com- 
pany, 19 

Royal   William,  the  steamer,  16 

Russia,  history  of  the  use  of 
subsidies  in,  59-62 ;  proposed 
granting  of  bounties  in  the 
form  of  loans,  60,  61 ;  increase 
in  the  fleet  of,  61 ;  grants  of, 
98 

Russian  Volunteer  Fleet,  61 

ST.  GEORGE'S  PACKET  COMPANY. 
17 

St.  Louis,  the  steamer,   86 

St.  Paul,  the  steamer,  86 

Sammons,  Thomas,  U.  S.  Con. 
Gen.,  66 

Savannah,  the  first  steamer  to 
cross  the  Atlantic,  16 

Shipbuilding,  in  the  United 
States,  14-72 ;  in  England,  15- 
24;  in  France,  28,  30;  in 
Germany,  37,  39,  40,  41 ;  in 
Austria-Hungary,  46,  47 ;  in 
Spain,  55,  56 ;  in  Russia,  61  ; 
In  Japan,  64 ;  in  the  United 
States,  70-78,  89 

fSirius,  the  steamer,  16,  17 

Sloo,  A.   G.,  71,  72 


Skinner,  Robert,  U.  -S.  Consul, 
31,  41. 

Small,  Consul  General,  reference 
to,  25 

Smith,  U,  S.  Consul,  reference 
to,  59 

Snodgrass,  Con.  Gen.  John  H., 
reference  to,  61 

South  America,  use  of  subsidies 
in,  68,  98 

Spain,  history  of  the  use  of  sub- 
sidies in,  54-56,  97 

Spears,  John  R.,  reference  to  his 
"Story  of  the  American  Mer- 
chant Marine,"  19,  76 

Subsidy,  definition  of  term,  9 ; 
various  forms  of,  9  ;  use  of,  in 
England,  11-25 ;  in  Canada,  24, 
25 ;  in  France,  26-36 ;  in  Ger- 
many, 37-41 ;  in  Holland  and 
Belgium,  42,  43 ;  in  Austria- 
Hungary,  44-49 ;  in  Italy,  50- 
53 ;  in  Spain,  54-56 ;  in  Por- 
tugal, 56 ;  in  Denmark,  Nor- 
way, and  Sweden,  57,  58 ;  in 
Russia,  59-62 ;  in  Japan,  63- 
67 ;  in  China,  67 ;  in  South 
America,  68 ;  in  the  United 
States,  69-96 ;  summary  of,  97- 
99 

Sweden,  granting  of  subsidies  for 
mail  carriage  by,  57,  58,  97 

TAFT,  PRESIDENT,  94,  95 
Tennessee,  the  steamer,  75 

UNION  MARITIME  COMPANY,  35 
United  States,  competition  in  the 
overseas  between  England  and 
the,  14  ;  history  of  the  proposed 
system  of  ship  subsidies  in  the, 
69-96 ;  establishment  of  mail 
steamers  in  the,  70-78 ;  the 
"clippers"  of  the,  78 ;  revival 
of  the  steamship-subsidizing 
policy  in  the,  79,  80 ;  condi- 
tion of  the  merchant  marine  in 
the,  80 ;  bills  in  Congress  rel- 
ative to  bounties  in  the,  81- 
96 ;  grants  of  the,  98 ;  owner- 
ship of  ships  in  the,  98 ;  sub- 
sidized service  of,  in  1911,  98 ; 
total  tonnage  of  the,  99 

VAN  TROMP,   the  Dutch   admiral, 

13 

Vera   Cruz  packet  line,  76 
Viallatfis,     Achille,     reference     to, 

28-30,   32-36 

Washington,  the  steamer,   73 

Wells,  David  A.,  reference  to  his 
"Our  Merchant  Marine,"  11,  20, 
29,  30,  38,  69 

Wheelwright,  William,  19 

White  Star  Line,   23,  24 

Wood,  J.  K.,  U.  S.  Consul,  ref- 
erence to,  52 


103 


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